UBS’s Cautious Stance on Uniper

UBS has expressed a cautious stance on Uniper by maintaining its Sell rating and lowering the price target from €36 to €35. The financial services firm highlighted concerns over the company’s long-term earnings growth potential and strategic clarity, especially regarding its obligation to return excess equity to the German government.

Financial Forecast and Provisions

Uniper’s strong financial forecast for 2024 includes an expected EBITDA of €1.9-2.4 billion and adjusted net income of €1.1-1.5 billion. However, this has been overshadowed by an increased provision for repayment to the state, which has risen by €0.6 billion to a total of €2.9 billion, negating the positive earnings outlook.

Additionally, an upcoming hike in property taxes in Sweden, expected to cost around €25 million starting in 2025, contributed to UBS’s decision to reduce Uniper’s price target.

Regulatory Concerns

UBS pointed out the lack of regulatory clarity surrounding Uniper’s plans for green gas investments. Despite a commitment of €400 million to new projects in the first half of the year, including a significant pumped storage plant in Germany, uncertainty remains regarding the specifics of auctions for hydrogen-ready combined cycle gas turbines (CCGTs) in Germany.

Valuation Analysis

UBS based its Sell rating and price target on a sum-of-the-parts (SOTP) analysis with divisional discounted cash flows (DCF), cross-checked against relevant multiples. Uniper’s stock is trading at a 2026 estimated price-to-earnings (PE) ratio of 21.1 times, which is significantly higher than the sector average of 13.2 times.

The firm remains bearish on Uniper, citing the company’s stagnant earnings outlook through to 2030 and the impact of ongoing asset disposals and the sale of the government’s stake as limiting investment appeal.

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