It has been a long time since two companies monopolized so much can in the Ibex 35. Only Inditex and Iberdrola account for almost a third of the weight of the national index and they do so thanks to the extraordinary performance that both are registering in the Spanish market.
Specifically, Inditex’s weighting within the selective of the 35 reaches 16.57% while the utilities achieves a weight of 14.52%. Together they represent 31.1% of the Ibex 35, which constitutes the highest weight achieved between both companies since September 2020. If we also add the next company with the most weight, Banco Santander (11.76%), only the behavior of These companies represent almost 43% of the index. QTo see two other companies monopolizing so much power within the Ibex 35, it is necessary to go back a decade, when Inditex and Santander Bank They reached 31.2%. Although the combination of the weights of Telefónica and Santander has been the highest in the history of the Ibex 35: the weighting of both firms touched 43% in 2009.
The strong joint weighting of Inditex and Iberdrola is achieved by the momentum. Both companies will be able to remember 2024 as the year in which they made history on the stock market, as their shares have set new historical highs over the course of the year.
The shares of the Galician textile company even reached the level of 55 euros on October 16. Now they are moving somewhat lower, around 53.50 euros, but the advance of the company chaired by Marta Ortega is close to 36%. This sharp rise translates into Inditex’s market value has grown by more than 44.2 billion euros so far this year and is established as the most valuable company in the history of the entire Spanish market. Currently its capitalization exceeds 167,100 million euros, although it has even exceeded 171,000 million in recent weeks.
Although for the consensus of analysts that collects Bloomberg The Galician shares are trading without potential, there are already up to seven investment banks that offer valuations above 55 euros that would still leave a slight potential for revaluation in the coming months. The most attractive target prices even reach the level of 60 euroswith which Inditex would still have a rise of 12% and its market value would reach close to 187,000 million euros.
With a buy recommendation, even with its stock at these historical levels, its shares are still being purchased at a certain discount. Currently, the company’s expected profits in 2024 (which are again expected to be historic) are purchased on the stock market at a PER (times that the profit is reflected in the share price) of 27.7 times, which makes its securities are purchased at a 7% discount compared to the average of the last decade. From Citi they believe that “we continue to believe that valuation appears undemanding relative to growth“Experts project 20% growth in profits in the next three years until reaching over 7.1 billion euros in its fiscal year 2027 (PER of 22.9 times).
“We believe that in today’s sector, the essential factors for success are agility, flexibility, speed, a winning omnichannel formula and innovation. We believe that Inditex meets all of these requirements, as it continues to be the best in its class in terms of at speed, while applying a dynamic approach to space, the Internet and the integration between both channels,” say JP Morgan.
Iberdrola shares have also exceeded a level this year that they had never reached: 14 euros. Now, they move slightly below, although already There are also seven investment banks that value Iberdrola above 15 euros on the stock market. The most optimistic valuations are at 16 euros, which would also give it the opportunity to reach 100,000 million euros in capitalization. Currently, the market value of the utilities It is around 87.7 billion euros, almost 12.3 billion euros more than at the beginning of the year.
One of the analysis teams that sets the value of Iberdrola on the stock market at 16 euros is Goldman Sachs. From the American bank they justify this target price by claiming that “despite the solid results and a valuation higher than that of the sector, we believe that Iberdrola could continue to beat its counterparts,” they argue from Goldman Sachs. They further add that the company has “double-digit upside potential on consensus EPS, its electrification compound growth through the end of the decade (+6% compounded annual EPS even despite normalization of electricity prices) and its defensive business model”.
“In terms of valuation, we believe that Iberdrola’s current share price takes into account the value of eleven years of renewable energy projects, above the average of renewable energy developers. In our opinion, it fully reflects the strong Iberdrola’s growth ambitions in that market, and also takes into account the prices of the second largest renewable pipeline in the entire renewable sector,” explains Barclays.
Unlike what happens with Inditex, the strong rise that the electricity company accumulates on the stock market, of 16% in 2024, has made its shares more expensive. The expected profits for 2024 (which are estimated to be extraordinary, above 6.5 billion, due to the sale of assets in Mexico) are purchased at a PER of 16.5 times, 4% more expensive than the average of the last decade.
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