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Bloomberg: EDF’s Market Value Tops Total’s on Nuclear Outlook (Update2)

By Tom Cahill

June 21 (Bloomberg) — Electricite de France SA overtook Total SA as the euro-region’s biggest company by market value after analysts raised their stock-price targets on prospects nuclear power generation will keep growing.

Shares of EDF, whose 58 nuclear plants generate almost half of Europe’s nuclear power, rose as much as 5.80 euros, or 7.8 percent, to a record 79.90 euros in Paris.

The gains lifted EDF’s market value to 144 billion euros ($189.8 billion), exceeding Total, Europe’s third-largest oil company, for the first time. The stock traded at $78.77 at 12:48 p.m. local time.

Kepler Equities raised its EDF price target 31 percent to 101 euros today. UBS AG published an estimate of 100 euros, and Societe Generale forecast 88 euros. EDF is building a new nuclear power plant in France and wants to build reactors in the U.S. and U.K. as atomic power gains favor as a cleaner alternative to coal- and natural-gas fired power plants.

“In view of the increasingly positive outlook for nuclear, we believe that EDF, with almost half of EU and one-sixth of global nuclear reactor capacity, deserves to trade at a premium,” Societe Generale analysts Adam Dickens and John Honore said in a report titled “Buying the Stairway to Heaven.” They rate the stock “buy.”

BP, Shell

London-based oil company BP Plc and banking group HSBC Holdings Plc are larger by market value than EDF. They have primary listings in pounds, not euros. U.K.-registered Royal Dutch Shell Plc, Europe’s largest oil company, trades in London and Amsterdam.

EDF ranks as the world’s 17th largest company by market value in a search of all exchanges, according to Bloomberg data. The Paris-based company ranks behind Germany’s E.ON AG as the second-largest European utility by 2006 sales.

The French government has retained an 87 percent stake in EDF since its initial share offering in November 2005 at a price of 32 euros a share. The state can sell additional shares and reduce its stake to 70 percent under current French law.

The government may take advantage of record prices to sell an additional 7 percent to 8 percent of the company in September, UBS analyst Per Lekander said in a note to clients.

“We would expect this as a positive, mainly for liquidity reasons,” said Lekander, who has a “buy” recommendation on the shares. Of the 28 analysts who cover EDF, 15 have “buy” recommendations and six “sell” recommendations.

Francois Molho, an EDF spokesman in Paris, yesterday declined to comment on whether the French government planned to reduce its stake.

To contact the reporter on this story: Tom Cahill in London at [email protected]
Last Updated: June 21, 2007 06:53 EDT

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