(Finance) – A rapidly growing upstream business, an expanding biofuels business and the transformation of the chemicals business were the highlights of the recent Capital Markets Day in Eniin which the six-legged dog revealed the new strategic plan to 2027. The analysts of Barclays in a note confirming the recommendation “Overweight” and the target price to 19 euros per shareunderlining that the satellite model should ensure sustainable growth.
Despite a smaller-than-expected buyback, Eni increased its dividend policy by 6% to 1 euro per share for 2024. The planned distribution returns 30-35% of CFFO to shareholders compared to 25-30% last year. The management team also specified the potential upside of the buyback of stocks tied to CFFO outperformance and a higher macroeconomic price environment.
Although it was not discussed at the CMD, analysts write that the potential looming overhang caused by the Italian government remains a cause of worry. The €2.2 billion share buyback program completed in 2023 inadvertently increased the Italian government’s stake in Eni to around 34%. A sale of 4% of this stake is possible, creating a potential overhang. “We believe, however, that Eni could resolve this issue by using part of its new buyback mandate for participate in any ABB“, is underlined.
Barclays highlights that the company has an upstream business that is growing faster than its large-cap peers, with good near-term pipeline visibility, as well as adding Neptune volumes and divesting less profitable assets.
“So now the focus is on his strategy and restructuring of the downstream segments: Enilive, Versalis and Plenitude – reads the research – At CMD we received detailed information on the company’s growing biorefining capacity with new developments in North America and expansion plans in the Far East. The restructuring of Versalis involves the transformation of a petrochemical business into a biochemical business. Eni will target high-margin specialist biochemicals such as agricultural plastics, agricultural crops and automotive polymers to drive growth of the new platform, targeting EBITDA breakeven in 2025, positive EBIT in 2026 and FCF breakeven in 2027. CEO Claudio Descalzi also confirmed the future plans for the sale or listing of Enilive in continuity with the satellite model of the company.