Summary of European Equity Strategy Conference Call Industry Overview - The focus is on the European equity market, particularly in the context of potential recession risks and sector performance. Key Points and Arguments Market Outlook - European equities are currently trading in line with long-term cycle average multiples, indicating limited pricing of recession risks [2] - Analysis suggests that European equities have only "travelled" about one-third to half of the way towards pricing a moderate recession or material growth slowdown [2] - The risk-reward scenario remains negative, with a projected downside of -7% to a moderate bear case and -22% to a full bear case [2] Defensive Investment Strategy - A recommendation to shift investments into defensive sectors with relative earnings resilience, such as Defence, Utilities, Software, and Telecoms [4] - German defence companies, particularly Rheinmetall, are highlighted as top picks due to their fundamental resilience [4] Sector Analysis - Defence, Life Sciences, and Software sectors show positive exposure to Trump administration policies, while Semiconductors, Materials & Mining, and Autos are identified as more cyclical and risky [5][8] - Utilities and Telecoms are categorized as the most defensive sectors, with Software and Defence also showing resilience [16] Earnings Expectations - Analysts expect a skew towards downside in upcoming earnings results, particularly for cyclical stocks, with previews indicating that 40 stocks may miss earnings expectations [9] - Key stocks expected to beat earnings include Siemens Energy, Euronext, SocGen, AstraZeneca, and Accor, with a notable concentration in the banking sector [9] Pricing Power and Exposure - Defence, Software, and Semiconductors are noted for having the highest pricing power in the current environment [4][23] - A detailed analysis of stock-level cyclicality, pricing power, and exposure to Trump administration policies was conducted across approximately 550 companies [3][14] Risk Areas - Key areas of downside risk include Semiconductors, Materials & Mining, Construction & Materials, Transport, and Autos, which are considered highly cyclical [5] - The analysis also incorporates exposure to China and the US, with lower exposure preferred for resilience [14][26] Conclusion - The current market environment necessitates a more sophisticated approach to identifying defensives and cyclicals, moving beyond traditional measures [3][14] - The focus should remain on fundamentally resilient sectors while being cautious of valuation levels due to potential earnings downturns, especially in cyclical areas [15] Additional Important Insights - The analysis emphasizes the importance of understanding the interplay between sector performance, macroeconomic factors, and geopolitical influences, particularly regarding US policies and China exposure [3][14][26] - The report includes various exhibits that provide visual data on sector cyclicality, pricing power, and exposure to external factors, aiding in investment decision-making [16][21][23]

Core Insights - Three stocks with strong momentum and buy rank are highlighted for investors: Michelin, Allianz SE, and Engie SA [1][2][3] Group 1: Michelin - Michelin (MGDDY) has a Zacks Rank 1 and a 15.5% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [1] - Michelin's shares increased by 0.8% in the last three months, while the S&P 500 declined by 9.9% [1] - The company has a Momentum Score of A [1] Group 2: Allianz SE - Allianz SE (ALIZY) also holds a Zacks Rank 1 with a 5.5% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [2] - Allianz's shares rose by 21.5% over the last three months, contrasting with the S&P 500's decline of 9.9% [2] - The company has a Momentum Score of B [2] Group 3: Engie SA - Engie SA (ENGIY) has a Zacks Rank 1 and a 9.2% increase in the Zacks Consensus Estimate for current year earnings over the last 60 days [2][3] - Engie's shares gained 26.8% over the last three months, while the S&P 500 declined by 9.9% [3] - The company possesses a Momentum Score of A [3]

Core Viewpoint - Analyst recommendations play a significant role in influencing stock prices, but their reliability is questionable, particularly for NextEra Energy (NEE) [1][5][10]. Brokerage Recommendations - NextEra Energy has an average brokerage recommendation (ABR) of 1.90, indicating a consensus between Strong Buy and Buy, based on 20 brokerage firms [2]. - Out of the 20 recommendations, 12 are Strong Buy, accounting for 60% of the total recommendations [2]. Limitations of Brokerage Recommendations - Relying solely on ABR for investment decisions may not be wise, as studies show limited success in guiding investors towards stocks with the best price increase potential [5]. - Brokerage firms often exhibit a positive bias in their ratings due to vested interests, leading to a disproportionate number of favorable recommendations compared to negative ones [6][10]. Zacks Rank vs. ABR - The Zacks Rank, which is based on earnings estimate revisions, is a more reliable indicator of a stock's near-term price performance compared to ABR [8][11]. - Zacks Rank is displayed in whole numbers (1 to 5) and is updated more frequently, reflecting timely changes in earnings estimates, while ABR may not be current [9][12]. Current Earnings Estimates for NextEra - The Zacks Consensus Estimate for NextEra's current year earnings remains unchanged at $3.67, suggesting stable analyst views on the company's earnings prospects [13]. - Due to the unchanged consensus estimate and other factors, NextEra holds a Zacks Rank of 3 (Hold), indicating a cautious approach despite the Buy-equivalent ABR [14].

Core Viewpoint - TXNM Energy, Inc. is set to announce its first quarter 2025 financial results on May 9, 2025, prior to market opening, followed by a live conference call to discuss the results and company updates [1]. Group 1: Financial Results Announcement - The financial results for the first quarter of 2025 will be announced before the market opens on May 9, 2025 [1]. - A live conference call will take place at 11 a.m. Eastern Time on the same day to discuss the financial results and other updates [1]. Group 2: Participation Details - Investors and analysts can pre-register for the live conference call through a provided link [2]. - For those unable to pre-register, participation can be done by dialing specific phone numbers fifteen minutes before the event [2]. Group 3: Company Background - TXNM Energy is an energy holding company based in Albuquerque, New Mexico, serving over 800,000 homes and businesses in Texas and New Mexico through its regulated utilities, TNMP and PNM [4].

Company Overview - PPL Corporation is a leading U.S. energy company based in Allentown, Pennsylvania, providing electricity and natural gas to over 3.6 million customers [4] Upcoming Earnings Release - PPL Corporation will release its consolidated first-quarter 2025 earnings results on April 30, 2025 [1] - The earnings call will feature PPL's president and CEO, Vincent Sorgi, along with other executives discussing the quarterly results and business outlook [1] Conference Call Details - The conference call will begin at 11 a.m. Eastern Time and will be available via live webcast and telephone [2] - Interested participants can access the webcast at PPL's investor website or join by calling the provided numbers [2] Replay Information - A replay of the conference call, along with presentation slides, will be available for 90 days after the event on PPL's investor website [3]

Core Points - The New Mexico Public Regulation Commission (NMPRC) has issued a Certification of Stipulation recommending approval of PNM's 2025 Rate Request application [1] - The stipulation includes a $105.0 million increase in PNM's revenue requirements, based on a 9.45% return on equity and a 51% equity capitalization structure [3] - The rate increase will be phased in, with 50% effective July 1, 2025, and the remaining increase effective April 1, 2026 [2] Company and Industry Details - PNM is a wholly-owned subsidiary of TXNM Energy, which serves over 800,000 homes and businesses across Texas and New Mexico [6] - The current authorized rates for PNM are based on a 9.26% return on equity and a 50% equity capitalization structure [3] - Various parties, including the Utility Division Staff of NMPRC and several community organizations, support the stipulation, while other intervening parties do not oppose it [4]

Core Viewpoint - The utility sector is viewed as a safe investment during economic turbulence, providing essential services that consumers prioritize even in difficult times [1][7][8]. Group 1: Definition and Characteristics of Utility Stocks - Utility stocks are companies primarily involved in distributing essential services such as electricity, gas, and water [5][6]. - The Global Industry Classification Standard (GICS) categorizes the utility sector to include electric, gas, and water utilities, as well as independent power producers and energy traders [6]. - Utility companies exhibit low economic sensitivity, generating stable revenues and profits, and are known for their substantial dividends [8][9]. Group 2: Investment Appeal - Investors are drawn to utility stocks due to their "stickiness" in revenues, similar to healthcare and consumer staples, making them defensive stocks [7][8]. - Utilities are often among the best-yielding market sectors, providing safety and potential upside during market downturns [9]. - The sector's stability allows for gradual rate increases, although growth is typically capped at low single-digit rates [11]. Group 3: Recent Trends and Opportunities - The rise of artificial intelligence (AI) is expected to significantly increase power usage over the next decade, presenting a unique growth opportunity for utility companies [12][13]. - This trend may enable utilities to enhance their business results in a way that has not been seen before [13]. Group 4: Criteria for Selecting Utility Stocks - A quality screen for selecting utility stocks includes companies within the S&P Composite 1500, with a long-term estimated earnings-per-share growth rate of at least 5% [15]. - Stocks should have a dividend yield of at least 2.5%, with a history of growing dividends by at least 5% over the past year [16][17]. - Companies should have at least five covering analysts and a consensus Buy rating of 2.5 or less on S&P Global Market Intelligence's ratings scale [18][19]. Group 5: Recommended Utility Stocks - Recommended utility stocks include: - IDACORP (IDA): 2.9% yield, 5.5% estimated annual dividend growth, 8.3% long-term EPS growth, consensus rating 1.75 [19]. - NiSource (NI): 2.8% yield, 6.8% estimated annual dividend growth, 8.0% long-term EPS growth, consensus rating 1.53 [19]. - DTE Energy (DTE): 3.1% yield, 6.9% estimated annual dividend growth, 8.0% long-term EPS growth, consensus rating 2.05 [19]. - New Jersey Resources (NJR): 3.6% yield, 5.4% estimated annual dividend growth, 7.6% long-term EPS growth, consensus rating 2.22 [19]. - CMS Energy (CMS): 2.9% yield, 5.8% estimated annual dividend growth, 7.3% long-term EPS growth, consensus rating 2.21 [19]. - Sempra (SRE): 3.7% yield, 5.6% estimated annual dividend growth, 7.0% long-term EPS growth, consensus rating 2.11 [19]. - Ameren (AEE): 2.6% yield, 6.3% estimated annual dividend growth, 6.9% long-term EPS growth, consensus rating 2.24 [19]. - Public Service Enterprise Group (PEG): 3.1% yield, 5.7% estimated annual dividend growth, 6.6% long-term EPS growth, consensus rating 2.35 [19]. - Essential Utilities (WTRG): 3.2% yield, 6.6% estimated annual dividend growth, 6.5% long-term EPS growth, consensus rating 1.46 [19]. - FirstEnergy (FE): 4.1% yield, 5.6% estimated annual dividend growth, 5.7% long-term EPS growth, consensus rating 2.39 [20].

Market Overview - Wall Street is anticipating a challenging start to the week, with fears of a repeat of the 1987 Black Monday, which saw a 22.6% market plunge [5][6] - Major indexes, including Dow, S&P 500, and Nasdaq, are expected to open 6% lower, potentially making last week's $6.6 trillion losses appear minor [6] Economic Impact - President Trump's recent tariffs have caused global market turmoil, leading to uncertainty among investors regarding future market reactions [6][7] - Trump stated he would not engage in trade deals until trade deficits are addressed, which may prolong market distress until clarity on the tariffs' economic impact is achieved [7] Investment Recommendations - In light of the current market conditions, investing in safe-haven stocks, particularly in the utilities sector, is advised [3][4] - Recommended utility stocks include: - **Avista Corporation (AVA)**: Expected earnings growth rate of 14%, Zacks Rank 1, beta of 0.38, and a dividend yield of 4.81% [9] - **CMS Energy Corporation (CMS)**: Expected earnings growth rate of 7.8%, Zacks Rank 2, beta of 0.34, and a dividend yield of 2.99% [11] - **Exelon Corporation (EXC)**: Expected earnings growth rate of 6.4%, Zacks Rank 2, beta of 0.39, and a dividend yield of 3.53% [13] - **Southwest Gas Holdings, Inc. (SWX)**: Expected earnings growth rate of 17.1%, Zacks Rank 2, beta of 0.50, and a dividend yield of 3.60% [15]

Core Insights - Duke Energy has restored power to over 96% of customers affected by recent severe weather, with ongoing efforts to restore power to the remaining customers [1][3] - Storm-related outages have significantly decreased from over 60,000 to approximately 2,400, primarily in eastern Hamilton and Clermont counties [2][9] - The company is prioritizing the repair of large power lines to restore power to the maximum number of customers efficiently [4] Company Overview - Duke Energy is a Fortune 150 company headquartered in Charlotte, N.C., serving 8.4 million customers across multiple states and owning 54,800 megawatts of energy capacity [6] - The company also provides natural gas service to 1.7 million customers in several states [6] Energy Transition - Duke Energy is focused on an ambitious energy transition, investing in electric grid upgrades and cleaner energy generation methods, including natural gas, nuclear, renewables, and energy storage [7]

Core Insights - Itron, Inc. is collaborating with Norwegian utility Norgesnett to implement the first edge computing deployment in the Nordics using Itron's Grid Edge Intelligence portfolio, which includes distributed intelligence-enabled smart meters [1][4] - The project aims to modernize Norgesnett's grid infrastructure, enhancing visibility and control at the grid edge, and supporting the integration of distributed energy resources [2][3] Group 1: Project Overview - Norgesnett will deploy 10,000 Itron DI-enabled smart endpoints in the first phase starting in the first half of 2026, which will provide access to a range of applications to address challenges from increased distributed energy resources [4][5] - The deployment aligns with the Nordic Innovation vision for the region to become the most sustainable and integrated by 2030, focusing on real-time data insights to manage energy loads effectively [6] Group 2: Benefits and Features - The DI-enabled solution allows for flexible two-way communication, enabling remote updates and applications installation, as well as real-time energy usage data sharing with consumers [5][8] - The project is expected to improve operational efficiency, enhance customer engagement, and provide better outage detection and grid management capabilities [8] Group 3: Company Positioning - Norgesnett is recognized as Norway's most efficient power grid company, committed to minimizing energy loss and delivering reliable electricity while addressing the evolving challenges of the power grid [3][7] - Itron's advanced analytics on electricity usage will further enhance the service provided by Norgesnett, contributing to a more sustainable energy landscape [7][8]