Investing.com -- Morgan Stanley has doubled down on Europe’s utilities sector as energy security, electrification and AI-driven power demand reshape the investment landscape.
In its latest sector report, the broker reiterated an “Attractive” stance on utilities and named three high-conviction top picks it believes are best positioned to benefit from Europe’s accelerating clean-energy buildout and grid expansion plans.
National Grid
Morgan Stanley sees National Grid as one of the clearest long-term beneficiaries of Europe’s electricity infrastructure boom.
The broker expects power networks to become increasingly valuable as countries upgrade transmission systems, connect new renewable projects and prepare for rising electricity demand from EVs, heat pumps and AI-linked data centres.
National Grid stands out for its regulated asset growth visibility and defensive earnings profile, with the UK expected to remain one of the fastest-growing grid investment markets in Europe.
Engie
Morgan Stanley believes Engie is emerging as a stronger energy security and infrastructure play following its UK Power Networks acquisition.
The broker highlighted the company’s growing exposure to electricity networks alongside its integrated generation portfolio, which positions it to benefit from both higher power demand and Europe’s push to reduce reliance on imported fossil fuels.
Engie is also viewed favourably for its optionality in flexible generation and data-centre-related electricity demand growth.
Ørsted
Morgan Stanley upgraded Ørsted to “overweight” and added it to its top-pick list, citing what it sees as the strongest upside potential in its coverage universe.
The broker argues the offshore wind developer is well placed to benefit from renewed European energy security policies that are likely to accelerate renewable capacity additions over the coming decade.
Morgan Stanley also believes easing concerns around US offshore wind projects, improving balance sheet flexibility and higher long-term power prices could drive a further re-rating in the stock.
The report highlighted Ørsted’s estimated 38% upside to price target as the highest in coverage.
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