Defensive plays with strong catalysts; upgrade EDF
and GDF SUEZ to OW. The two stocks fit well with our
defensive view on the sector, as they offer superior
growth potential (EPS CAGR of 16.8% for EDF and
12.6% for GDF SUEZ over 2009-13) and a lower
exposure to the weak commodity environment we
expect in Europe. The forthcoming tariff reform (EDF), a
new CEO (EDF) and upcoming government decisions
(both stocks) offer clear catalysts.
We see a strongly positive skew to our risk/reward
award analysis. Our price targets of