RWE Earnings: Exceeding Consensus After Yet Another Outstanding Performance by the Trading Business

We confirm our EUR 48 fair value estimate after no-moat RWE released first-quarter results materially above company-compiled consensus thanks to yet another strong performance of the trading business and good wind conditions. The company conservatively confirmed its 2024 guidance. Shares sold off at the beginning of the year due to falling power prices and generation spreads, which entailed a downward revision of the guidance in January. Power prices have rebounded by 34% from the February lows and are flat year to date. Yet, RWE shares are still down by 15% since the beginning of the year. We believe that continuing strong earnings, a likely upgrade of 2024 guidance, and a pending interest-rate cut by the European Central Bank should drive a rerating of the stock.