Deutsche Bank upgrades Iberdrola to buy with €22 target

Deutsche Bank upgraded Spanish utility Iberdrola to buy from hold on Tuesday, raising its price target to €22 from €18.50. The bank pointed to stronger power prices, an improving near-term growth outlook, and potential upside from a strategic plan update scheduled for March 2027.

The new target of €22 equates to 17.4 times estimated 2028 earnings. It implies an 8% share-price upside from the €20.33 closing price on September 25, alongside a total return potential of 13%. Iberdrola trades at roughly 16 times Deutsche Bank's 2028 earnings estimate, compared with 13 times for the sector, leaving its valuation premium to direct peers at its lowest level for some time.

Deutsche Bank left its 2026 earnings-per-share estimate unchanged at €1.01, but raised its 2027 forecast to €1.14 from €1.09 and its 2028 forecast to €1.27 from €1.17. The broker expects double-digit earnings growth to continue through 2028. It also anticipates Iberdrola will lift its 2026 adjusted net income guidance to 12% growth at its third-quarter results, above the current guidance of at least 8%.

Looking further out, Deutsche Bank expects Iberdrola to extend its 2025-28 plan through 2030 in March 2027, potentially raising its annual adjusted net income growth target to 10% from 8%. That would bring adjusted net income to around €10 billion by 2030, roughly 10% above the Bloomberg consensus. Earnings drivers include Spain's planned 2027 capacity market, data-centre demand, higher U.S. power purchase agreement prices, and persistent inflation in Britain, while adverse political changes and lower electricity prices remain key risks.