JP Morgan stays at 'buy' on National Grid highlighting 'solid' balance sheet

Analysts at J.P.Morgan reiterated their 'overweight' recommendation for shares of National Grid in anticipation of increased investor focus on the company's 'solid' balance sheet.

Being two years into the electricity and natural gas provider's five-year guidance, they expected investors would increasingly focus on the balance sheet as network investment accelerated towards the second half of the current decade.

They estimated that the company would be able to deliver increased capital expenditures, including a "meaningful" step up in fiscal years 2027-28, even as its dividend payouts kept up with CPIH inflation.

National Grid would manage to do both without raising capital nor any "major risk" of credit downgrades, they judged.

Their March 2024 target price was at 1,150.0p and that for March 2025 at 1,275.0p, supported by a 5.0% dividend yield.

And in the case of their 'blue sky' scenario, their estimates pointed to over 30% and 80% upside, respectively.

"Shares have been strong YTD, yet we expect outperformance should continue given regulatory visibility and a solid balance sheet."