RBC Capital Markets downgraded Eni SpA (BIT:ENI) to “sector perform” from “outperform,” citing stretched valuation after a year of strong share price gains, in a note dated Tuesday.
The analysts said Eni’s stock, which closed at €15.32 on Sept. 1, had outperformed peers thanks to a series of asset disposals and growing investor confidence in its energy transition strategy.
With shares now trading more in line with rivals, the bank set a price target of €17, implying an 11% upside, but noted that the risk-reward balance looks less compelling than before.
The downgrade comes after Eni consistently executed on asset sales across its satellite businesses, including Var Energi, Ithaca, Enilive and Plenitude.
These disposals demonstrated the value of the company’s portfolio and generated billions in proceeds that helped strengthen the balance sheet at a time of growing macroeconomic uncertainty.
RBC said with most of the catalysts already realized, further gains from divestments will be limited.
Exploration success has also been a factor in recent performance. Eni made high-profile discoveries in Namibia and Indonesia, where it formed a new joint venture with Petronas.
That deal, expected to close by year-end, should add about 50,000 barrels of oil equivalent per day to output, rising to around 100,000 boe/d by 2030.
Group production, which has hovered between 1.6 million and 1.8 million boe/d for two decades, stood at 1.71 million boe/d in 2024 and is forecast to dip to 1.70 million boe/d in 2025 before rising to 1.79 million boe/d by 2027.
Financial forecasts point to softer earnings ahead. Adjusted diluted EPS is expected to fall from €1.63 in 2024 to €1.44 in 2025 and €1.20 in 2026, before recovering to €1.69 in 2027.
Cash flow per share is projected at €3.75 in 2025 and €3.38 in 2026, down from €3.68 in 2024, before rising again to €4.13 in 2027.
Dividend growth is expected to remain steady. The payout is forecast to rise from €1 per share in 2024 to €1.14 by 2027, with the yield increasing from 6.5% in 2024 to 7.4% in 2027.
RBC flagged this as supportive for income-focused investors, though the free cash flow yield looks less compelling compared with peers.
RBC’s scenario analysis places Eni’s downside case at €10, representing a 28% fall from current levels, and an upside case at €22, a 50% gain.
The analysts said that while operational momentum, further divestment gains, or continuity in leadership could provide upside surprises, uncertainty around the transition of CEO Claudio Descalzi in 2026 adds risk.
Descalzi, who has led the company since 2014, is set to finish his fourth term, and any external appointment could unsettle investors.
Source :
https://www.investing.com/news/stock-market-news/rbc-downgrades-eni-after-35-rally-says-valuation-now-leaves-limited-upside-4219090
