National Grid's defensive qualities were given a boost this week when credit rating agency Moody's upgraded its stance from 'negative' to 'stable'.
IC TIP:
Buy
at
563p
As anticipated in our buy tip, Moody's change of heart results from anticipated growth in National Grid's revenues and earnings. These have benefited from relatively high UK inflation in the second half of 2008, which allowed price rises of up to 6.7 per cent for electricity transmission.
Moody's has also taken into account appeals that National Grid's US subsidiaries will make to their own regulators requesting higher authorised returns. If allowed, these would improve earnings and cash flow in the future.
Date: 17 Jun 2009
Price: 537p
