On Thursday, Eni SpA ( ENI (BIT:ENI):IM) (NYSE: E), the $44 billion energy giant, experienced a shift in its stock rating as UBS analyst Joshua Stone downgraded the company from Buy to Neutral. Along with the rating change, the price target was also adjusted, now set at €14.00, a decrease from the previous target of €15.50. According to InvestingPro analysis, Eni currently maintains a GOOD Financial Health Score of 2.6, with an attractive dividend yield of 5.12%.
Stone noted that Eni's stock had performed well, outpacing its peers by 8% since mid-June, a success attributed to the company's strategic asset sales and an increase in share buybacks. Despite a 6.22% decline over the past six months, the analyst pointed out that the rapid advancements made by Eni have led to a situation where there is "less room for positive surprise" in terms of consensus earnings and the scope of buybacks for the year 2025. InvestingPro's Fair Value analysis suggests the stock may still be undervalued.
The valuation of Eni's shares was another point of concern for UBS. Stone remarked that the shares are currently trading at a 5% premium to their historical enterprise value to debt-adjusted cash flow (EV/DACF) ratio. Without an increase in prices, this premium suggests that there may be limited potential for further stock appreciation.
The downgrade to Neutral reflects UBS's outlook that Eni's stock may not have much room to grow under the current market conditions. The new price target of €14.00 per share is indicative of this more cautious stance on the company's near-term investment prospects.
In other recent news, Italian multinational oil and gas company Eni SpA demonstrated resilience in its third-quarter performance, despite a 14% year-on-year decrease in pro forma adjusted EBIT and cash flow from operations. Amid volatile global energy markets, Eni reported a pro forma adjusted EBIT of €3.4 billion and a cash flow from operations of €2.9 billion. In the same period, strategic investments marked significant developments, including a €2.9 billion stake by KKR in Enilive and the sanctioning of two biorefineries in South Korea and Malaysia.
Eni also advanced its upstream operations and initiated restructuring plans for its chemical segment, Versalis, with a target for positive EBIT by 2027. The company's debt and leverage were reduced ahead of schedule, aiming for a pro forma leverage ratio towards the lower end of 15%-25% by year-end.
In addition, Eni anticipates full-year upstream production around 1.7 million barrels per day and gross CapEx below €9 billion. The company has prioritized shareholder distributions, announcing an increased share buyback plan of €2 billion for 2024.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.