National Grid shares edged lower in London trading on Thursday, slipping 1.56% to 1,278 pence, as the U.K. power network operator’s stock traded in a range of 1,272.60p to 1,297.60p. The decline comes ahead of the company's full-year results, which are scheduled for release on May 14.
JPMorgan Adjusts Price Target
JPMorgan reduced its price target on National Grid to 1,440 pence from 1,450 pence, while maintaining an “overweight” rating. The adjustment, made by analyst Pavan Mahbubani, was linked to the grid operator's recent trading update. Despite the slight cut, the bank’s stance remains positive, indicating that the recent trading update did not fundamentally alter the company's long-term outlook.
EPS Headwinds from U.S. Operations
National Grid has warned that underlying earnings per share (EPS) for the fiscal year ending March 31 will be reduced by approximately 1 pence, primarily due to higher storm-related expenses and customer refund charges in the United States. Morningstar's Tancrede Fulop, CFA, reiterated a fair value estimate of 1,440 pence following the company's pre-close update in April, describing the stock as “moderately undervalued.” Fulop noted that the one-off items would trim fiscal 2026 EPS by roughly 1.3%, but the rest of the guidance aligns with earlier expectations, including EPS growth of 6% to 8%.
Market Value and Dividend Yield
National Grid remains a significant player in the large-cap income space, with a market capitalization of approximately £63.51 billion and a dividend yield of 3.66%, according to Hargreaves Lansdown. The stock underperformed the FTSE 100 in the previous session, closing lower.
Long-Term Investment Plan
In March, National Grid unveiled a five-year capital expenditure plan through fiscal 2031, targeting at least £70 billion in total capex. The plan aims for approximately 10% annual asset growth and compound EPS growth of 8% to 10% per year, starting from fiscal 2026. Chief Executive Zoë Yujnovich described the strategy as “disciplined execution, at scale.” The company has also signed on to RIIO-T3, Ofgem's price-control package, which sets out the returns for operating and upgrading U.K. electricity transmission infrastructure between April 2026 and March 2031.
Sector Context and Risks
The utility sector has seen increased attention recently, with several U.K. names moving after United Utilities announced an £800 million capital raise to boost infrastructure. Russ Mould, investment director at AJ Bell, noted that this represents “an unusual level of excitement” for a sector often considered dull. However, risks remain for National Grid, including higher financing costs due to elevated interest rates, potential regulatory tightening, and project execution challenges. Aarin Chiekrie of Hargreaves Lansdown highlighted the pressure of completing major projects within deadlines and budgets.
Looking Ahead
National Grid shares are currently caught between near-term EPS headwinds and a substantial long-term push in regulated investments. The next major catalyst for investors will be the full-year results on May 14, when CEO Zoë Yujnovich and CFO Andy Agg will provide further details on the company's performance and outlook.
