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 for the first time. EDF fell back to close up 2.52 euros at 76.62 euros for a value of 139 billion euros, below Total's 141 billion euros.
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.''
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.
Oil Embargo
EDF would rank as the world's 18th-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.
EDF was founded in 1946 when the government combined 1,700 power-generation and distribution companies into a national monopoly. After the Arab oil embargo in 1973, France became one of the first nations to develop nuclear power -- its first atomic plant started in 1977.
France now gets 78 percent of its power from nuclear energy, the most of any nation, according to the International Energy Agency in Paris. EDF generates about 17 percent of the world's nuclear power.
French-government controlled Areva SA, the world's largest builder of nuclear power plants, reprocesses spent nuclear fuel from EDF and other generators. The country last year passed a law that will allow it to test locations for deep geological waste storage sites, slated to be ready by 2025.
Tightens Safety
While France has never had a major accident from nuclear power, Areva claims its third-generation plant, called the European Pressurized Reactor, tightens safety standards further, including being able to contain a core meltdown and withstand an airplane crash.
Areva is building its first version of the plant in Finland, with a second under construction for EDF in Flamanville, Normandy. Yesterday it filed for design approval in the U.K. with supporting letters from companies including EDF. EDF wants to build as many as four reactors in the U.K.
``It's just technology,'' Vincent de Rivaz, head of EDF's U.K. business, said at a nuclear power conference on June 6. ``We have to move from emotion to motion, from passion to practicability.''
De Rivaz said nuclear was the only way to close a gap in U.K. power production slated to open as plants are closed to meet pollution standards.
Share Sale
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.
Bloomberg
by Tom Cahill
