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Eni (NYSE:E) wobbles between small gains and losses as RBC Capital upgraded shares to Outperform from Sector Perform with an €18 price target, saying the company is starting to demonstrate value creation in its satellite strategy for the energy transition through the Plenitude and Enilive sell-downs at significantly higher values than expected.
The divestments are part of Eni’s (E) strategy to develop units linked to the transition to low-carbon energy that can access capital markets and finance their own growth, in part through third-party funding, and importantly, this comes at a time when the core business continues to perform well, RBC’s Biraj Borkhataria says.
Looking forward, asset sales should help drive de-leveraging which makes Eni’s (E) distribution plans more defensive than peers, according to Borkhataria.
“Sales for both Plenitude and Enilive provide significant markers that suggest Eni’s share price is well below the sum-of-the-parts,” and “it’s not the presence of asset sales that are positive, but that these appear to be coming at valuations which are accretive to the group,” Borkhataria writes.
