Iberdrola Renovables SA and EDP Renovaveis SA climbed after UBS AG raised its rating on the Iberian renewable energy companies to “buy” from “neutral.”
Iberdrola Renovables rose as much as 5.9 percent, the most in five months, in Madrid trading and EDP Renovaveis gained as much as 6 percent, the most intra-day since July. Iberdrola Renovables was up 5.3 percent at 2.49 euros at 11:09 a.m. local time and EDP Renovaveis gained 5.2 percent to 4.16 euros.
The wind power developers’ shares slumped this year as the Spanish government mulled changes to subsidized rates for alternative energy producers, U.S. returns dipped and they downgraded earnings forecasts. Last week, Prime Minister Jose Luis Rodriguez Zapatero’s cabinet cut some wind subsidies by a third for the next two years.
“These risks have now played out,” UBS analyst Alberto Gandolfini said in a report. “These negatives now seem to be behind us and are more than discounted in the shares at current levels.”
Gandolfini raised his price target for Renovables to 2.80 euros from 2.50 euros and increased his target for Renovaveis to 5.00 euros from 4.50 euros.