Deutsche Bank Reaffirms Bullish Stance on RWE Shares

Deutsche Bank reaffirms buy rating for RWE with €55 price target, citing strong long-term drivers like data center demand and a €35bn investment plan, despite near-term market softness.

Despite facing a weaker market environment, Deutsche Bank Research has reiterated its buy recommendation for German energy giant RWE. Analyst Olly Jeffery, following an investor roadshow in the United States, confirmed the bank's price target of €55 per share, citing multiple long-term supportive factors for the utility.

Strong Long-Term Drivers Outweigh Near-Term Weakness

The company's stock reached a new ten-year peak of €58.52 on March 17 but has since retreated, trading approximately 6% below that high. Nevertheless, its twelve-month performance remains robust, showing a gain of roughly 66%. Deutsche Bank's latest analysis provides an external assessment following this pullback, concluding with a constructive outlook.

A focal point of the review is the current quarter. Jeffery anticipates a period of softness in RWE's trading division but expects this underperformance to be offset by strength in other operational segments. Key medium-term growth catalysts identified include the profitability of internal capital investments, rising electricity demand from data centers, and favorable commodity prices.

This optimism is underpinned by RWE's substantial capital expenditure program. The group plans to invest a net €35 billion in new power generation capacity across Europe and the United States by 2031. In North America, its strategy involves a dual focus on renewable energy sources and gas-fired power plants, positioning the latter as a reliable electricity source for burgeoning AI infrastructure. Notably, around 80% of the company's anticipated power generation for 2026 is already hedged at fixed prices.

Broad Analyst Consensus and Dividend Growth

The positive sentiment extends beyond Deutsche Bank. On March 19, DZ Bank raised its price target for RWE more aggressively, lifting it from €63 to €65. The bank's buy recommendation was partly justified by an expectation of limited competition from Chinese suppliers in the European onshore wind market until at least 2030.

Furthermore, RWE's shareholder returns policy adds to the investment case. The company has outlined a plan for 10% annual dividend growth. It forecasts a dividend of €1.20 per share for 2025, followed by €1.32 per share in 2026.