Deutsche Bank upgrades Public Power Corp or PPC to hold from sell, increasing its target price to 26 euros from 17 euros previously.
The broker cites “a 50% chance of the company recovering cash from its Public Service Obligations (PSOs).” It estimates them at around 250euros-350 euros per year.
PSOs mainly reflect the cost of supplying power on the islands at the same price as on the mainland, while it is much more expensive to supply power on the islands.
“Even though certainty remains, with the New Democracy election win, some supportive comments from the government, and regulatory progress, we believe the chances of PSO recovery have increased. A mechanism for PSO recovery would insulate PPC to a degree from higher oil prices and provide a significant short-term earning boost, ”Deutsche Bank notes.
At midday Monday, the stock was down 0.3% at 27.72 euros, broadly in line with the rest of the market.