Enel Gains as Analyst Upgrades Stock on Profit Target, Pledge to Cut Debt

Enel SpA jumped to the highest in more than a month after Italy’s biggest utility said it will beat its 2010 profit target, prompting some banks including Natixis to raise their ratings on the stock.

Enel shares rose as much as 1.5 percent to 3.7875, the highest since June 22 and gained 4 cents, or 1.1 percent, to 3.77 at 1:45 p.m. in Milan. The advance left Enel with a market value of 35.5 billion euros ($46.2 billion).

Chief Executive Officer Fulvio Conti said late yesterday he expects Enel to beat a target for 2010 earnings before interest, tax, depreciation and amortization of 16 billion euros ($21 billion). “We will be closer to 17 billion euros,” Conti said on a conference call with analysts.

“Given the optimism displayed by management, which raised its 2010 guidance, we have raised our recommendation to neutral,” Natixis analysts wrote in a note to clients today. The investment bank increased its target price on Enel to 3.82 euros from 3.53 euros.

First-half net income fell to 2.43 billion euros from 3.52 billion euros a year earlier, beating the 2.1 billion-euro mean estimate of 11 analysts surveyed by Bloomberg. Excluding one- time items, profit rose 11 percent, Enel said yesterday in a stock-exchange statement.

Revenue rose to 34.8 billion euros as sales increased in Latin America and Spain. Net financial debt rose to 53.89 billion euros from 50.87 at the end of 2009 mainly because of the effects of euro depreciation versus dollar and Latin America currencies.

The company reiterated it plans to cut debt this year to 45 billion euros, excluding foreign-exchanges effects, by selling assets, including a stake in its Enel Green Power unit.

To contact the reporter on this story: Tommaso Ebhardt in Milan tebhardt@bloomberg.net.

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