UBS downgraded Belgian electricity transmission operator Elia Group to 'neutral' from 'buy' on Tuesday, raising its 12-month price target to €144 from €117. The move comes after Elia shares surged roughly 120% over the past year, including a 127% rally from late February 2025 lows following a capital raise that removed overhang risk.

Analysts noted that at €135 per share, the market has already priced in expected regulatory improvements in Germany and Belgium. While UBS acknowledged Elia's superior growth profile supported by secular capex growth, the firm believes shares are now fairly valued. Elia's German subsidiary 50Hertz accounts for approximately 65% of EBITDA over 2026-30 and 70% of enterprise value according to UBS estimates.

UBS raised 2025-27 net income estimates by 1-3% and 2028-29 estimates by 7-15%, reflecting higher assumed returns on equity. The firm forecasts EPS growth averaging 13% annually through 2030, even with a projected 25% decline in German capex from 2030. With shares trading at a 40% premium to spot RAB and dividend yield at 1.5% - the lowest among regulated peers - UBS sees the risk skewed 1.4 to 1 to the downside, with scenarios ranging from €60 to €190.