Broker snap: Positives priced in at National Grid

17th May 2011 11:56

While Nomura raises its estimates for power and gas grid operator National Grid (NG) ahead of the group's full-year results due on Thursday, the broker says that many positives are already priced in to the stock, and leaves its 'neutral' rating. The broker notes that NG has been a notable outperformer in 2011, with the share price up 13% in the year-to-date, "outperforming the wider European utilities sector by 11%."Nomura highlights three main factors of this outperformance: earnings momentum; optimism on a potential US disposal; and a supportive macro environment ("with falling bond yields helping NG"). As a result the broker raises its earnings per share forecasts for the year ended March 2011 by almost 7%, and its target price by 18% from 570p to 675p.However, while it sees the attractions of a standalone UK company (with the disposal of US operations), Nomura thinks that the market may have to wait until next year for a decision on this.---BC