Endesa Earnings: Below Guidance Due to High Finance Costs; 2024-26 Guidance Confirmed; Shares Cheap

We confirm our EUR 22.40 fair value estimate after no-moat Endesa released 2024 results below its guidance and confirmed its 2024-26 targets. As expected, the firm will pay a EUR 1 dividend on 2023 results, implying a 6% yield. Shares are materially undervalued due to full exposure to the adverse Spanish regulatory backdrop and the recent fall in wholesale power prices. Yet, we see limited downside on the regulatory front after the extension of the energy levy announced in late December. Further, Endesa's sensitivity to falling wholesale power prices is below most peers due to its short position.