Key Moments
- Deutsche Bank resumed coverage of RWE with a Buy rating and a €50 price target per share, citing a strong fundamental outlook.
- RWE shares are up 55% this year, delivering the second-best total shareholder return in the SX6P index; Deutsche Bank still sees further upside.
- Additionally, Deutsche Bank projects 17% upside to 2026 consensus EPS and values RWE at an implied 15.5 times 2027 earnings.
Deutsche Bank’s Investment Thesis on RWE
Deutsche Bank restarted coverage of RWE (ETR:RWE) with a Buy recommendation and a €50 price objective. The bank points to a robust fundamental backdrop, underpinned by a diversified global pipeline in renewables, flexible power generation, and emerging technologies.
“RWE has had a good 2025,” analyst Olly Jeffery said, highlighting multiple growth drivers and the strong rally in the share price during Q4. Furthermore, the recent share price strength was supported by the first major data centre-related transaction in the European utilities space, with additional deals underway.
Share Price Performance and Capital Allocation Outlook
RWE’s stock has advanced 55% this year, ranking second for total shareholder return in the SX6P index. Despite this strong performance, Jeffery expects additional upside ahead of the company’s capital allocation update in March.
Investors are closely watching how RWE deploys capital. The company is approaching the end of its €1.5 billion share repurchase program. While Deutsche Bank notes the buyback could continue, Jeffery emphasized that the sharp stock appreciation and broader investment alternatives make an extension less appealing. As a result, incremental capital could be redirected toward higher-return projects instead of further share repurchases.
Growth Initiatives Across Key Regions
Deutsche Bank highlights RWE’s active project pipeline in several core markets:
| Region | Focus Area | Key Detail |
|---|---|---|
| U.K. | Offshore wind | Participating in the AR7 offshore wind auction with 5.2GW of consented capacity, the largest among peers. Auction results are expected in mid-January. |
| Germany | Hydrogen-ready gas generation | Well positioned for upcoming tenders for new-build, hydrogen-ready gas plants, having secured 2.7GW of turbines and supply chain capacity. |
| U.S. | Renewables | Currently building 4.3GW of renewable capacity. Improved power purchase agreement pricing is enhancing expected returns. |
Earnings Outlook, Valuation and Risk Factors
Deutsche Bank anticipates significant upside to market expectations. Specifically, it projects 17% upside to consensus EPS in 2026, driven by stronger Supply & Trading business performance and lower financial expenses. The bank also sees moderate earnings upside beyond 2026. Notably, forecasts do not include potential capital gains from data centre-related transactions, although these have already supported the share price.
On valuation, Deutsche Bank assigns an implied multiple of 15.5 times 2027 earnings. It considers this premium justified given RWE’s expected earnings growth and execution track record.
Meanwhile, the bank cautions that certain risks could temper its positive outlook. These include power prices, U.S. political developments, disappointing auction results, poor farmdown prices, and lower interest rates, according to Jeffery.
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