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On Wednesday, CFRA analyst Jeff Lye adjusted the stock rating for Saipem (BIT:SPMI) (SPM:IM) (OTC: SAPMF), moving it from Strong Buy to Hold and revising the price target to €2.40, down from the previous €2.80. The downgrade comes despite Saipem’s fourth-quarter revenue surpassing consensus estimates, reporting €4.42 billion against an expected €4.09 billion. However, the company’s net income of €100 million fell short of the forecasted €109 million.
Saipem’s full-year revenue for 2024 experienced a significant increase of 23%, reaching €14.55 billion, while adjusted EBITDA saw a substantial rise of 44% to €1.33 billion. This financial growth was primarily attributed to the robust performance of the Asset Based Services segment and increased utilization in Offshore Drilling.
The decision to adjust the stock rating was influenced by the announcement on February 23, 2025, regarding a Memorandum of Understanding (MoU) for a potential merger with Subsea 7 (OTC:SUBCY). CFRA expressed caution over the projected annual synergies of €300 million by the third year post-merger, as outlined by Saipem’s management.
While the merger is anticipated to be completed in the second half of 2026, CFRA maintains the earnings per share (EPS) estimate for 2025 at €0.23 and has introduced an EPS forecast of €0.26 for 2026. The revised price target is based on a forward price-to-earnings (P/E) ratio of 10.5 times the estimated 2025 earnings per share, which represents a discount equivalent to one standard deviation below the three-year average valuation for Saipem.
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