European names in the utilities space have been a huge disappointment for investors in recent years but a Goldman Sachs analyst is convinced the sector is ripe for a meaningful rebound in 2024.  

Utilities have underperformed the broader European market by close to 20% due to a sharp increase in interest rates.

But Alberto Gandolfi now expects the sector to do well since inflation in the region has eased significantly from its peak.

On Monday, Robert Holzmann – Governor of the central bank of Austria, however, said the European Central Bank could decide against cutting rates in 2024 (read more).

Names that the Goldman Sachs analyst is bullish on in particular include RWE AG (ETR: RWE) – the third-largest name in renewable energy in Europe.

Alberto Gandolfi has a price target of €53.5 ($58.80) on shares of the multinational based out of Essen, Germany that suggests an over 35% upside from here.

He’s bullish on RWE even though its reported €6.07 billion in revenue for its third financial quarter in November – down an alarming 44% versus a year ago.

Other names that Goldman Sachs recommends owning within the European utilities space include Italy’s Enel (ETR: ENL) and Spanish Solaria. Gandolfi sees over 30% upside in shares of these companies as well.  

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