(Finance) – EnVent Italia SIM has lowered to 297 euros per share (from 366 euros previously) on target price on 4AIMthe first SICAF focused on investments in companies listed and being listed on Euronext Growth Milan, maintaining the judgment on the title to “Outperform” given the potential upside of 24%.
Analysts note that the 4AIM “Sector 1” share price has gained 32% in the last 12 months, outperforming the Italy Growth Index which lost 11% in the same period.
The index FTSE Italia Growth continued to lag behind compared to the FTSE MIB and FTSE Mid Cap in the first quarter of 2024. Investors tend to favor large caps and less risky assets, such as Italian government bonds, while the EGM index continues to be weighed down by outflows from PIRs. Market liquidity remains low, with turnover down around 16% year-on-year and median 2024-25 EV/EBITDA at 5.6-4.6x, a significant discount to its historical level of around around 7-8x.
EnVent says that, historically, small-cap stocks have outperformed large-cap stocks in the year following interest rate peaks. With the imminent start of a cycle of interest rate cuts (inflation permitting), the FTSE MIB index may be less attractive to investors due to its high exposure to the banking sector. This change in monetary policy could also spark interest in the EGM market, as the multiples are very low and in some cases the fundamentals are really attractive, effectively materializing the so-called “small business effect“.
As the FTSEMIB/EGM ratio is at an all-time high, EnVent believes a retracement may be possible; Who will lead the movement remains the unknown. Theregovernment commitment to establish a fund (public-private) 1 billion euros to invest in SMEs could outline a different scenario.