Engie Stumbles as Berenberg Shifts to "Hold"

Engie is among the biggest decliners on the CAC 40 on Wednesday morning at the Paris Stock Exchange, after Berenberg downgraded its rating on the stock from "buy" to "hold," even as it raised its price target from 17.5 to 24.5 euros.

Around 9:30 a.m., shares of the energy group were down 1.5% while the CAC was up 0.1%. The stock is still up over 6% since the start of the year, trading at its highest levels since 2011.

In a report dedicated to energy and environmental services specialists, Berenberg notes that the sector continues to show very strong prospects, a trend that, in its view, should persist until 2026 and beyond.

The analyst has identified four major positive factors, starting with consistently strong electricity demand in Europe, as well as a continuous increase in carbon prices, which is making pollution increasingly expensive—a benefit to cleaner electricity producers such as renewables or nuclear.

The broker also highlights the rise of "flexible" power plants capable of quickly adapting to demand, along with the prospect of increased investment in power grids.

With this in mind, Berenberg names British company SSE as its top sector pick, just ahead of Germany's RWE, but prefers to downgrade its advice on Engie due to valuation concerns.