Brokers turn cautious on EDP and EDPR as expectations grow

** Several brokers turned their view on EDP EDP and EDPR EDPR negative, downgrading their ratings on the Portuguese utilities, following a MS cut on Friday on EDP's renewables unit

** Deutsche Bank downgrades both companies to "hold" from "buy" after the performance of both stocks since May, with EDPR the best in the sector and EDPR the third-best performer

** DB sees EDP "much closer to full valuation" and expects an Iberian hydro performance in Q3 slightly below normal

** "After a strong performance, EDPR now trades on a c. 25% npv/capex premium on the same measure and looks less attractive", adds DB

** JP Morgan places both EDP and EDPR on Negative Catalyst Watch and cuts EDP to "neutral" from "overweight" as the company outperformed European utilities sector by 22%

** "Expectations for the CMD on 6 November may overestimate the earnings growth to be contributed by 71% affiliate EDPR to 2028E and underestimate the willingness of EDP management to guide conservatively", it adds

** Citigroup also downgrades EDPR to "neutral" from "buy" as the "speed which the shares have re-rated is causing the broker a "degree of nervouness" into the CMD after the share have gained more than 30% YTD and more than 90% in six months

** The broker recognizes the positive U.S. Artificial Intelligence/Data Centers exposure, but the "actual volume exposure is limited to c.5 TWh over next 5 years or c.10% of output"