December 2020

Year to date, Italgas stock has significantly outperformed the FTSE MIB Index. After the correction in October, the release of the Strategic Plan 2020-2026 paved the way for an upward movement that is bringing the stock price back, close to the levels of the beginning of the year.

Despite the challenges imposed by Covid-19, which have also made an impact in terms of stock prices volatility, Italgas stock keeps faith with the pillars of its equity story. In fact, it continues to be a growth story, with a solid financial profile, able to offer attractive returns to its shareholders including through a clear dividend policy.

The average target price of the brokers covering the stock is 5.9 euro; therefore, compared to current prices, the stock offers further headroom for appreciation.

Equity markets recovering since mid-March, despite October’s market correction

Since mid-March, European stock markets have recovered from the lows reached during the acute phase of the first wave of the pandemic. Investors have welcomed the effects of the agreement reached among European Union countries on the Recovery Fund, as well as the support offered by the ECB in keeping the risks of the banking system under control.

Markets then experienced a correction in October, when the second wave of infections has raised fears about the economic impacts of the new restrictions introduced, while the outcome of the upcoming presidential elections in the United States appeared uncertain.

Instead, investors’ risk appetite returned in the aftermath of Joe Biden’s victory on 3 November. In the face of a divided Congress, it seems unlikely that a huge fiscal stimulus package will be approved; which makes it more likely that the Fed will inject new funds into the system, actually supporting the share prices. Investors have also found an additional positive trigger in the news – released by some pharma companies – that a vaccine against the virus will be available soon.

Italgas stock has strongly outperformed the FTSE MIB

Italgas stock followed these underlying trends; from the year-low at 4.11 euro, recorded on 12 March, the stock started a wide recovery movement, which brought it back to a period-high of 5.7 euro on 12 August, and then retraced part of the rise, especially in October. In November, the price is again on the rise, approaching the levels of the beginning of the year.

Year to date Italgas has clearly outperformed the index of the blue chips on the Italian market, while it has moved substantially in line with the trend of the European utilities index. In October, the weakness of the stock with respect to the dynamics of the utilities sector index is also likely due to the disappointment of investors following the failure to convert into law the decree of last August, relating to gas tenders and Sardinia methanization of Sardinia.

A positive boost from the presentation of the new Strategic Plan

The price of the shock has risen again from 30 October, following the presentation of the new Strategic Plan, which was very welcomed. In particular, analysts and investors appreciated the significant amount of investments put into play to drive growth, the potential of entering into new businesses, the attitude of realism on the developments of green hydrogen and, last but not least, the features of the dividend policy, which offers strong visibility on the back of the floor at 0.256 euro and an option to benefit from growth.

Italgas share can count on a broad and qualified sell-side coverage. Currently the stock is regularly covered by 18 brokers. Nine of them have buying recommendations (Buy/Outperform/Accumulate), while seven have neutral recommendations (Hold/Equal weight). The average target price at the moment is at the same level of the beginning of 2019, at 5.9 euro. In the last few weeks, the spread between high (6.70 euro) and low (4.90 euro) target price narrowed.