Citi continued to rate two Argentine power generation companies as buys, keeping a high-risk designation on both names and setting distinct price targets. The bank's valuation places Pampa Energia at $121 per ADR and Central Puerto at $22 per ADR.
For Pampa Energia, Citi anticipates a materially higher 2026 EBITDA, estimating roughly $1.6 billion, which equates to a 55% increase versus the prior year. The bank tied much of that expected expansion to the production ramp-up at the RDA asset, noting that output reached 22,000 barrels per day in May and is forecast to rise gradually to 28,000 barrels per day by the fourth quarter. Citi also cited stronger power prices and earnings contributions from TGS and Transener as supporting elements for Pampa's performance. Looking further ahead, the firm projects Pampa's EBITDA to reach about $1.9 billion in 2027.
Citi expressed a positive view of Pampa's FertilPampa project, folding its potential into an upside scenario. The bank quantified the project's contribution to the upside price target at $6 per ADR.
On Central Puerto, the bank's model points to a 2026 EBITDA of $521 million, another 55% year-over-year increase. Citi linked this revision to strong second-quarter results and to upward adjustments in price and gross margin estimates for the third quarter.
In its commentary on the sector, Citi observed that the second-quarter earnings season illustrated how recent reform measures have affected organic earnings growth across Argentina's power generation industry. The firm drew attention to capital allocation as a central consideration for Central Puerto's investors, noting that the company's pursuit of oil and gas opportunities could redirect attention away from its core power generation business. Citi added that a sale of Central Puerto's mining and forestry assets would likely be greeted favorably by the market.
Takeaway - Citi's maintained buy recommendations rest on substantial EBITDA upgrades for both firms, underpinned by operational ramps and favorable price dynamics, while also pointing to corporate strategy and asset sales as important factors for investor returns.