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Investing.com -- UBS on Tuesday upgraded Eni shares, lifting its rating to Buy and noting that the Italian group now stands out for both the strength of its upstream pipeline and the quality of its capital spending.
The bank raised its price target to €18 from €15.5 after increasing earnings forecasts by an average of 16% for the 2025-28 period.
Eni shares rose 1.4% in early Milan trading.
Eni has been one of the strongest performers in the European energy sector this year, helped by consistent earnings beats, progress on asset sales and a rebound in upstream production.
UBS highlights the company’s growth profile as “the most attractive of the large caps,” with a projected production compound annual growth rate (CAGR) of 5% to 2028 and a resources base more than 20% above the sector average.
A central pillar of the upgrade is Eni’s investment strategy. The bank’s analysis shows the company allocates around 20% of capital to growth—above the sector average—and directs a larger share of this to higher-return projects.
Analysts led by Joshua Stone estimate Eni’s growth capital expenditure (capex) carries an internal rate of return (IRR) of 16.2%, the highest in the sector.
“Our analysis highlights it as having the highest quality spending plans with an IRR on new investments >16%,” analysts wrote.
“We expect this, together with a restructuring of chemicals, to drive a sharp recovery of returns over the forecast period, which in turn justifies a continued re-rating of shares while positioning remains negatively skewed,” they added.
The refining and chemicals segment has weighed on Eni’s performance in recent years, but the company’s plan to shut three Italian steam crackers is expected to reverse the majority of losses, with a €250 million earnings benefit built into 2026 estimates.
The bank also points to a more defensive balance sheet. Net debt is falling this year despite lower commodity prices, helped by more than €8 billion of asset disposals, including sales in Enilive, Plenitude, Ivory Coast and Congo LNG.
Positioning, meanwhile, remains “negatively skewed” with short interest rising to around 7.1%.
Analysts note that headline free-cash-flow yields may understate Eni’s appeal because they do not adjust for growth spending.
After normalising for sustaining capex, Eni trades closer to peers while offering a stronger earnings trajectory, with an EPS CAGR of about 20% through 2028 versus 9.5% for the sector, UBS said.