Goldman Sachs cuts Enel, Enel Green Power forecasts on tax rise

Aug 22, 2011 - Goldman Sachs has cut its estimates and price targets on power group Enel (BIT:ENEL) and on its renewables unit Enel Green Power (BIT:EGPW) in view of the Italian Government's proposal to raise the energy tax.
Under Italy's latest austerity package aimed at saving EUR 45.5 billion (USD 65.564bn) so as to balance the budget in 2013, the so-called Robin Hood tax on electricity generation is proposed to rise to 10.5% from 6.5% in 2011-2013 and to also extend to grid operators and renewable energy generation.
Goldman Sachs, which reduced its estimates on other Italian utilities last week, lowered Enel's price target to EUR 5.30 from EUR 5.50, following a cut in its earnings per share (EPS) estimates for 2011-2015 to take into account the impact of the possible tax rise. The US bank, however, confirmed the "buy" rating on Enel.
Goldman Sachs revised down its EPS forecasts on Enel by 6% and the EPS on Enel Green Power - by 4% for 2011. The EPS estimates on Enel were lowered by 4% for 2012-2015 and Enel Green Power's EPS projections were reduced by 1%.
Enel Green Power offers a continuous growth capability with investments in renewable technologies and has exposure to higher energy prices, Goldman Sachs said. The bank cut its 12-month price target on Enel Green Power to EUR 2.30 from EUR 2.35, with an upside potential of 54% compared with 40% for the sector.
Enel had gained 2.39% to EUR 3.344 and Enel Green Power was up 1.81% to EUR 1.521 at 1327 CET on the Milan market on Monday.
(EUR 1 = USD 1.441)

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