Bernstein classifies ADNOC Gas and Vertiglobe as the best investment options in the energy sector.

Bernstein, a global financial research firm, announced the start of coverage of the energy sector in the Middle East and North Africa region, noting that the adaptive governance model in the UAE, disciplined sovereign ownership structures, and clarity of cash flows across the energy value chain were major factors that contributed to enabling the country to transform owned assets into attractive investment platforms within a short period of time.

In its report, Bernstein identified both ADNOC Gas and Vertiglobe as “Best Picks within the energy sector,” and described the two companies as representing high-quality investment opportunities that are trading at less than their fair value.

Bernstein operates from major global financial centers, including New York and London, and is backed by Société Générale and AllianceBernstein, which manage more than $850 billion globally.

The report indicated that the energy model based on the active role of governments in the region as allocators of capital, and the use of national companies and capital markets, allows the transfer of resources into long-term contracts, stable cash flows, and returns to shareholders, which enhances the levels of visibility and clarity in profits across the various energy sectors, in addition to activities with regulated returns.

In this context, Bernstein confirmed that ADNOC Gas and Vertiglobe represent a clear model for the development of the energy system and capital markets in the UAE, and described ADNOC Gas as a strong platform for long-term growth in the gas sector, supported by long-term local supply contracts and quantities of liquefied natural gas that have been sold in advance, which reduces implementation risks and enhances the stability of cash flows.

Bernstein also described Vertiglobe as one of the producers with the most structural advantages in the field of nitrogen fertilizers, benefiting from low gas costs and the diversification of its asset base in the UAE, Egypt, and Algeria, in addition to its strong ability to generate free cash flows that enhance the value it provides to shareholders.

The company also indicated that there are long-term growth opportunities related to Vertiglobe’s role within ADNOC’s strategy to develop low-carbon ammonia at the global level.

Bernstein began covering ADNOC Gas with an “Outperform” rating, which indicates expectations of better performance compared to its peers in the sector, and set a target price for the stock at 4.08 dirhams. Based on prevailing market prices on April 9, the price target indicates an expected increase of about 25%, driven by increasing market perception of the strength and sustainability of the company’s cash flows and contractual returns.

In justifying this positive outlook, Bernstein emphasized the pivotal role that ADNOC Gas plays in supporting local gas supplies in the UAE, through long-term local revenues of a semi-regulated nature, as the country seeks to achieve self-sufficiency in gas by 2030.

Bernstein also initiated coverage of Vertiglob with an “Outperform” rating (outperform), and set a target price for the stock at AED 3.66, which is the highest target price among research entities covering the stock. Based on the closing price of 3.06 dirhams on April 9, the price target reflects a potential increase of about 20%, supported by expectations of continued scarcity of supply in nitrogen fertilizer markets after 2027, in addition to the company’s competitive advantage in terms of low costs, asset diversification, and export ability.

The report indicated that, despite the current geopolitical challenges, the energy sector in the UAE enjoys a high degree of operational and financial flexibility, supported by conservative financial foundations and stable cash flow models, which has enabled companies to maintain stable performance during periods of external turmoil.

Bernstein also highlighted the financial paradigm shift implemented by ADNOC from a vertically integrated national company to a flexible system that includes listed companies. She explained that the approach of separating assets and providing minority stakes to investors reflects the UAE’s philosophy based on flexibility, building partnerships, and benefiting from capital markets to support long-term growth.

According to the report, this model contributes to enhancing capital recycling, improving levels of transparency, and accelerating signals reaching markets, while maintaining government ownership and strategic oversight.