UBS has expressed a cautious stance on Uniper by maintaining its Sell rating and lowering the price target from €36 to €35 as the financial services firm highlighted concerns over the company’s long-term earnings growth potential and strategic clarity, especially in light of its obligation to return excess equity to the German government.
Uniper’s strong financial forecast for the year 2024, which includes an expected EBITDA of €1.9-2.4 billion and adjusted net income of €1.1-1.5 billion, has been overshadowed by an increased provision for repayment to the state.
The provision has risen by €0.6 billion to a total of €2.9 billion, negating the positive impact of the improved earnings outlook. Additionally, an upcoming hike in property taxes in Sweden starting from 2025, estimated to cost around €25 million, has contributed to UBS’s decision to reduce Uniper’s price target.
UBS also pointed out the lack of regulatory clarity surrounding Uniper’s plans for green gas investments. While the company has committed €400 million to new projects in the first half of the year, including a significant pumped storage plant in Germany, uncertainty remains regarding the specifics of auctions for hydrogen-ready combined cycle gas turbines (CCGTs) in Germany.
In terms of valuation, UBS based its Sell rating and price target on a sum-of-the-parts (SOTP) analysis with divisional discounted cash flows (DCF), cross-checked against relevant multiples.
UBS noted that Uniper’s stock is trading at a 2026 estimated price-to-earnings (PE) ratio of 21.1 times, which is significantly higher than the sector average of 13.2 times. The firm remains bearish on Uniper, citing the company’s stagnant earnings outlook through to 2030 and the impact of ongoing asset disposals and the sale of the government’s stake as factors limiting the investment appeal.
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