National Grid says performance in line with expectations, Citi cuts rating

Investing.com -- In its pre-close update for the six months ending September 30, National Grid (NYSE:NGG ) (LON:NG ) in an exchange filing said that the group’s performance is in line with expectations, with underlying EPS "expected to be weighted to the second half of the year."

"We downgrade NG shares to Neutral, with a revised price target now at 1,050p (from 985p). We have no hesitation in stepping back into the shares should there be any unjustified sell-off given the strong fundamentals," said analysts at Citi Research in a note.

For its UK operations, including Electricity Transmission and Electricity Distribution, National Grid expects operating profits to be evenly distributed throughout the year. 

The company also flagged a projected £70 million boost from the Electricity System Operator (ESO) business, stemming from accounting adjustments related to its classification as held-for-sale up until the end of September.

"On a relative basis, we see better value in other regulated names in the sector such as E.On or Redeia, both of which we rate with a Buy," Citi added.

In the US regulated businesses, including its New York operations, National Grid expects operating profits to be weighted towards the second half of the year, following historical trends. 

This marks a return to typical performance after the first half of last year was impacted by an environmental provision charge.

For National Grid Ventures, the company predicts a 40:60 split in operating profit between the first and second halves of the fiscal year. Interest costs are expected to be more evenly distributed throughout the year. 

Additionally, National Grid noted that the weighted average number of shares for the first half stands at 4,526 million, reflecting the impact of its recent rights issue on both net debt and its issued share capital.

"Overall, we see this as an in-line update and assume the long-term outlook remains unchanged," analysts at Jefferies said in a note.

Source: Investing.com