Bradesco cuts Cemig price target to R$ 13

Bradesco BBI cut its price target for Cemig from R$ 15 to R$ 13 while maintaining a neutral rating. The revised target implies an upside potential of 20% and incorporates recent corporate results, the generation unit energy balance, and updated regulatory parameters for its distribution arm and Gasmig.

Analyst Francisco Navarrete of Bradesco BBI and analyst Ricardo França of Ágora Investimentos noted that Cemig trades at a real internal rate of return of 12.3%. They view this valuation discount compared to private peers as justified by state control. The analysts highlighted that discounted valuation multiples and a dividend yield of approximately 7% provide downside protection.

Although the generation unit faces short-term pressure from spot-market electricity prices, the bank projects a recovery starting in 2027. Additionally, the scheduled 2028 distribution tariff review is expected to boost EBITDA significantly following heavy capital investments. Their base scenario assumes hydroelectric concessions renew under the quota regime, though permission to renew through concession fees and sell power in the free market would offer further upside.

The company also recently restructured its leadership. On September 11, Cemig approved the election of Marco Aurélio Martins da Costa Vasconcelos as chief executive and Alexandre Ramos Peixoto as board chair.