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IBERIAN DAILY 13 JUNE (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: ANNUAL SPANISH MARKET REPORT, ELECTRICITY SECTOR.

Despite the corrections, the Ibex remains at 14,000 points
Despite the trade agreement between the US and China, the 55% tariffs to the Asian country failed to provide optimism on Euroepan markets, hit this time by the increased geopolitical tensions in the Middle East. In the STOXX 600, the best-performing sectors were Energy (for the third consecutive session in view of the hike in Brent crude prices) and Utilities whereas Travel&Leisure and Basic Resources ended with the biggest drops. On the macro side, in the US, May’s production prices climbed less than expected and weekly jobless claims rose more than expected. In Brazil, April’s retail sales climbed more than expected. In Spain, the PM P. Sanchez announced that he will not call early elections and that will end his mandate. On the geopolitical front, Israel attacked Iran’s nuclear, ballistic and military installations whereas the latter reacted with a drone attack on Israeli territory.
What we expect for today
European stock markets would open with drops >-1.5% following Israel’s attack on Iran, with the energy sector benefiting from the hike in Brent crude prices. Currently, S&P futures are down -1.6% (the S&P 500 ended +0.2% higher vs. the European closing bell). Asian markets are sliding (China’s CSI 300 -0.8% and Japan’s Nikkei -1.1%).
Today in the euro zone we will learn April’s industrial output and trade balance, in Spain and Germany May’s final inflation.


COMPANY NEWS

ANNUAL SPANISH MARKET REPORT
Today we release our annual Spanish market report in which we review our estimates and T.P. for all the stocks in our coverage universe and we highlight the top picks of our portfolios (model, 5-stock, high yield and Mid&Small cap). On the macro side in Spain, although we are conservative, we expect a solid GDP in 2025-26 of 2.3%/1.6%, where the engine will continue to be private consumption. Due to the weight of the service sector and limited trade exposure to the US, the Spanish stock market has been a safe haven vs. current risks, contributing to the IBEX 35 being the best index in 2025 and now having low upside. We set a Top-Down IBEX level of 14,290 points (+12% vs. previous biannual report), with no upside (+0.3%) and with more conservative EPS estimates than the consensus. On the Bottom-Up level, we have a target of 15,309 for the IBEX (+8% upside and +17% vs. our last annual report), with a CAGR’24-27e of +7% in aggregate EPS. In stock coverage, in this report we no longer cover Lar España, Minor Hotels and Grupo Catalana Occidente (companies delisted or in the process of being delisted) and we include Amper, where we recently initiated coverage. Thus we currently cover 53 stocks, for which we have an OVERWEIGHT recommendation for 75% and UNDERWEIGHT for 25%, meaning a significant increase vs last year (11%). In this report we downgrade the recommendation of Endesa, Neinor Homes and OHLA to UNDERWEIGHT and only raise that of Vidrala to OVERWEIGHT. In our changes to T.P. (+1.5% on average in our coverage universe), we raise the T.P. more than +10% in seven companies (Indra, Mapfre, Iberdrola, Unicaja, Bankinter, FCC and Ferrovial), and more than -10% lower in five companies (OHLA, Neinor, Logista, Acciona Energía and Greening). Given the level of the index, our positioning for 2H’25 is cautious, with a preference for bond proxies and defensive stocks, and we are neutral in growth/value.