Analyst Sarah Lester of Morgan Stanley maintained a Buy rating on Italgas S.p.A. (I10 – Research Report), with a price target of €8.10.
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Sarah Lester’s rating is based on several compelling factors that make Italgas S.p.A. an attractive investment opportunity. The recent acquisition of 2i Rete Gas is seen as a transformative move for Italgas, not only enhancing its revenue potential through increased capital expenditure but also offering significant cost synergy opportunities. This strategic acquisition positions Italgas to benefit from a large-scale capex catch-up, particularly in digitalization, which is expected to drive asset base growth and generate stronger revenue opportunities.
Furthermore, Italgas is projected to deliver a total shareholder return of approximately 14%, supported by a robust dividend yield and consistent earnings growth. The company’s track record of achieving operational efficiencies, with a notable 40% reduction in operating expenses from 2016 to 2023, further bolsters its earnings potential. Despite recent stock performance gains, Sarah Lester sees additional upside potential, with the stock trading at an attractive valuation compared to its peers and a price target indicating a 15% upside. The upcoming company event is anticipated to provide further insights into integration and synergy achievements, reinforcing the investment thesis.