E.On Sets 2024 Guidance Above Expectations; Materially Increases Investments

We maintain our EUR 11.40 fair value estimate as we roll over our model to incorporate the final 2023 results of no-moat E.On. The group set its 2024 guidance above our expectations and FactSet consensus. It rolled over its five-year business plan to 2028, materially increasing its investments on more favorable regulation of networks. The 2028 net income target is set 32% above the previous 2027 guidance and involves a 1.3% compound annual growth rate from 2023 and 6% when restated from one-offs during 2023. The target to raise the dividend by up to 5% a year has been extended to 2028. The 2023 dividend is set at EUR 0.53, 4% above 2023 and implying a 4.5% yield, below the sector's median of 4.9%. That said, the firm offers the longest-duration dividend growth commitment among the European utilities we cover.