On Tuesday, JPMorgan adjusted its outlook on National Grid (LON:NG:LN) (NYSE:NGG), reducing the price target to GBP12.00 from GBP12.75, while keeping an Overweight rating on the stock. The firm sees National Grid as well positioned to capitalize on network growth opportunities, which they believe are value-accretive. The company's recent GBP7 billion equity raise has provided answers to concerns about its balance sheet.
National Grid now aims to achieve 10% asset growth by 2029, with a dividend that is expected to grow in line with the Consumer Prices Index including owner occupiers’ housing costs (CPIH). JPMorgan finds the valuation of National Grid shares appealing, citing a 35% potential upside to their March 2026 sum-of-the-parts (SoP) based price target of 1,200p. The firm's bull case scenario suggests a 70% upside, noting that the stock is currently trading around their bear case scenario.
According to JPMorgan, the current market price does not reflect the true value of National Grid shares, attributing the undervaluation to uncertainties surrounding elections and regulatory decisions in the UK Electricity Transmission sector. Clarity is expected to emerge following the regulator's methodology decision, scheduled to be announced next week. JPMorgan reaffirms its confidence in National Grid, adding the stock to its Analyst Focus List and maintaining its Overweight stance.
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