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RWE (RWEOY) stands tall as a renewable energy powerhouse, yet the winds of investor activism continue to sweep through its boardrooms. Activist investor Elliott Investment Management recently made waves by unveiling a nearly 5% stake in the German utility, urging a major boost to its $1.6 billion share buyback program.
The timing could not have been more telling. Just as RWE unveiled $10.8 billion cut in its spending plans through 2030 and tightened its investment criteria, Elliott seized the moment. The activist investor supports the decision, calling it a crucial step toward more disciplined capital allocation.
But its expectations do not stop there. With RWE’s valuation still lagging, Elliott sees a pressing opportunity. Citing the newly announced capex reduction, the firm is pushing for a substantial increase and acceleration of the ongoing share buyback program. With capital discipline now in the spotlight, the path RWE chooses next could reshape its standing in the energy sector.
About RWE Stock
RWE (RWEOY), headquartered in Germany, generates and supplies electricity across Germany, the United Kingdom, the rest of Europe, North America, and beyond. Its integrated business model gives it a strong foothold to capitalize on the rising global demand for energy.
With a $23.3 billion market cap, RWE is one of Europe’s five largest utilities. It is Germany’s biggest power producer and ranks second in the United Kingdom.
RWE has been on a strong upward trajectory. The stock has climbed 15.8% on a YTD basis, with a 13.1% gain over the past three months. In the last month alone, the stock rose by 14.2%. Adding to that, on March 24, the shares surged 2.1% following Elliott Investment Management’s news.
A Closer Look at RWE’s Fiscal 2024 Earnings
On March 20, RWE turned heads with its annual fiscal 2024 results, surpassing its own projections from November. The energy giant’s adjusted EBITDA came in at €5.7 billion, exceeding initial forecasts and reinforcing its financial momentum.
Each segment played a distinct role in shaping the overall results. The offshore wind segment delivered an adjusted EBITDA of €1.6 billion. The onshore wind and solar segment showed solid momentum, rising 20.4% year-over-year to €1.5 billion in 2024.
Flexible generation’s adjusted EBITDA came in at €1.9 billion in 2024. Meanwhile, the supply and trading segment outperformed expectations, with an adjusted EBITDA of €679 million, significantly surpassing guidance.
Adjusted net income stood at €2.3 billion, while adjusted EPS stood at €3.12.
For fiscal 2025, the company expects adjusted EBITDA to range between €4.55 billion and €5.15 billion. Adjusted net income is projected between €1.3 billion and €1.8 billion. Despite scaling back capital expenditure, RWE remains committed to its long-term targets, aiming for adjusted EPS of approximately €3 in 2027 and €4 by 2030.
What Do Analysts Expect for RWE Stock?
Jefferies has reaffirmed confidence in RWE. Analyst Ahmed Farman maintains a “Buy” rating and set a price target of €40.00. Deutsche echoes this bullish sentiment, keeping its “Buy” rating intact with a price target of €38.00.
Wall Street’s confidence in RWE remains strong, with a consensus rating of “Strong Buy.” Among the 10 analysts covering the stock, nine recommend a “Strong Buy,” while one rates it a “Moderate Buy.” The average price target of $43.20 represents potential upside of 26% from current levels.
