In these early months of 2021, Hera’s share price has gained strength. And not only in absolute terms, with a rise of over 10%, but also because it has outperformed the index of the utility sector. In the last few trading sessions, the stock has even outperformed the FTSE MIB, which is heavily weighted towards stocks that allow the theme of future recovery to play out in a catch-up trade.

The solid results of fiscal year 2020 represent a milestone in Hera’s growth path considering the scenario in which they were achieved. Therefore, they provide an anchor of certainty in a context of stock markets suffering from a severe lack of visibility, especially on the timing of exit from anti-pandemic restrictions.
Investors can read in a very positive way these 2020 results, which surprise while overperforming the preliminary data released in January. Hera confirms its characteristics of a company capable of promptly intercepting economic growth by improving its cash generation.

The new Plan to 2024 clearly indicates both the extent and quality of the value that Hera Group can create: the targets set in the past have been exceeded for the fifth time in a row; the new objectives to 2024 and 2030, are more ambitious than the previous ones and even more closely linked to the new priorities of a Europe that is moving towards “zero emissions” and wants to make the economy even more circular; the prospect of steady growth in dividend per share is confirmed.
Are all elements that will help enhance investors’ perceptions of Hera’s strengths and prospects.

Today Hera stock trades at multiples way lower than the past. On the other hand, consensus target price is still close to 4 euro.

In light of results that confirm how the Company continues to deliver the profitable growth indicated in the Business Plan despite the risks posed by Covid-19, we are trying to understand the reasons behind market’s behaviour, which at the moment seems to remain indifferent to the huge undervaluation experienced by the share price.

Uncertainty and volatility are the key words that have dominated the equity markets in these times of Covid-19 pandemic. Long term sustainability and “green” agenda are the key words that have shaped the new monetary and fiscal policies in Europe.
Hera’s solid fundamentals, confirmed by half-year results, its authentic commitment to 2030 ESG goals, and the room for potential capital gain considering the mean target price of c.4 euro form the pillars of a robust investment case, which looks appealing, especially in the new scenario.

Hera’s price remains well below its fair value, despite showing the features of a defensive stock, because of the uncertainties concerning the way Italy will exit the deepest phase of the crisis originated by the pandemic.

When the emergency related to the Covid-19 outbreak first hit Italy, Hera’s share price was at its record high of 4.5 euro, reached on 19 February 2020. The sell-off that generally involved all stock markets led Hera to experience a sharp correction, even though more limited compared to that experienced by the FTSE MIB index and the other multi-utilities.

Over the period from 2018 year-end to 19 February 2020, Hera’s share price surged (+67%), overperforming both the industry index – which grew by 61% – and, to an even greater extent, the Italian Blue Chips index, which in the same period increased by 39%.

In 2019, Hera stock price surged by 46.1%, outperforming both the FTSE MIB (+28.1%) and the industry index (+35.0%).

The strong rally of Hera shares took place against a benign backdrop for equity investments, especially favouring the utility sector.

In a context of bullish stock markets, Hera can boast a number of Company-specific drivers.

During 2019, Hera’s stock rose following a continuing upwards path. It over-performed both the FTSE MIB and the FTSE Italy All-share Utility Index, despite both indices had a significantly positive rally since the start of the year.

In this first part of the year, Hera’s share price rose sharply, peaking at 3.55 euro on 18 July 2019. The rally, which took place amid a bullish market outlook, also reveals some Company-specific drivers. Starting from January, stock markets have surged, driven by the Fed’s change of stance: at the beginning of 2019, the […]