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September 2020

03. Italgas shares return to 2019 year-end level and provide 4.7% dividend yield
Data di pubblicazione:

On last July’s trading day, Italgas share price was at the same level it reached at the end of 2019. Considering the 0.256-euro divided per share paid on 20 May 2020, year-to-date 2020 Total Shareholder Return is 4.68%, i.e. coinciding with the dividend yield. 

Despite large fluctuation in prices driven by the Covid-2019 crisis, Italgas stock benefits from the resiliency of the underlying business and enjoys the Company solid financial profile, as proven by the debt rating that Fitch has recently confirmed.  

With a consensus target price of 5.9 euro at the end of July 2020, even at the current price level of 5.22 euro that is 32.3% above the year-low of 12 March 2020, Italgas stock provides attractive potential for additional appreciation.


In the first seven months of 2020, Italgas stock performed in line with the European utility index, whereas it outperformed the Italian blue-chip index by almost 18 percentage points.

In a context deeply affected by the restrictions imposed to contain the spread of the virus, since March the monetary and fiscal policy authorities have taken significant measures aimed to counter the economic recession.

Several scenario elements have therefore supported the progressive recovery of Italgas share prices, after the price bottomed at the year-low of 4.11 euro on 12 March 2020.

Two supportive macro-drivers have been both interest rates, destined to stay at very low levels for a long time, and the new EU agenda, which has supported the whole utility industry, as it aims to relaunch economic growth through investments that facilitate the energy transition.

In the last few months, the recovery of Italgas shares have also counted on Company-specific  factors: in addition to the new guidance presented on 11 June 2020 that was slightly above consensus expectations, the award of the tender for the Belluno gas concession and lately, on 27 July 2020, the release of half-year results that prove an uninterrupted growth path both for revenues and EBITDA. Leveraging on an increasingly digitalized and efficient structure, Italgas has shown its progress in carrying out its capex plan, thus paving the way for continued growth in the future. Even the 500-mln€ bond issue successfully placed in mid-June, proved the Company’s capacity in terms of access to credit. Italgas can also count on a cost of debt that is one of the most competitive in the industry.

An additional Company-specific driver not to be overlooked: on 20 May 2020, Italgas paid a 0.256 euro dividend per share, thus remunerating its shareholders in line with the policy set out in the 2019-2025 Business-Plan, in a landscape where many issuers had to reduce or cancel the earnings distribution to preserve financial balance.

In the last few trading days of July, the acceleration in the virus spread has made the equity markets puzzled about the likely pace of the recovery in the global economy in the second part of the year. Amid an earnings season that is showing a mixed picture of how pandemic has been handled across businesses, attention is being refocused on how individual companies comment on their outlook.

From this viewpoint, the Italgas announcement of a new Business Plan presentation in late October, having already confirmed the 2020 guidance at the time of the release of half-year results, helps reassure the market that the Company remains focused on long-term objectives.

Italgas stock boasts a broad and qualified sell-side coverage. Presently 20 brokers cover the stock, of which one – Goldman Sachs – does not allow any disclosure for their recommendation and target price on Italgas. Concerning the other 19 brokers, as at 31 July 2020, 9 of them have buying recommendations (Buy/Outperform/Accumulate), while 8 are neutral (Hold/Equal weight). The average target price is currently 5.9 euro, i.e at the same level of the beginning of 2019.

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