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Investing.com - UBS initiated coverage on Italgas SpA (BIT:IG) with a Buy rating and a price target of EUR9.30 on Monday.
The Italian company, which is the leading gas distributor in Italy with 56% market share and also operates in Greece, derives more than 90% of its EBITDA from regulated activities, according to UBS.
Following Italgas’s acquisition of its largest peer 2i Rete Gas in April, UBS estimates the company’s Regulatory Asset Base (RAB) will grow at an average of 12% annually over 2024-2030, supporting both EPS and dividend per share growth of 8% annually over 2025-2030.
UBS notes that while Italgas shares have risen 65% year-to-date, making it one of the best performers in the utility sector, the stock still trades at a significant discount to peers at 7.8x 2027E EV/EBITDA and 11.1x 2027E P/E versus peers at 10.9x and 13.3x, respectively.
The investment bank identifies the company’s first Capital Markets Day following the merger, scheduled for October 30, as a key catalyst for the stock.
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