On Friday, Eni SpA ( ENI (BIT:ENI):IM) (NYSE: E) experienced a shift in stock rating as Stifel adjusted its view on the company from Buy to Hold, accompanied by a decrease in price target to EUR14.70 from the previous EUR17.30. This change comes ahead of the company's second-quarter 2024 results set to be released on July 26, before the market opens.
Stifel's assessment anticipates that the market will hone in on earnings per share (EPS) and leverage metrics in the upcoming report. Projections indicate a significant 25% year-over-year decline in EPS for the second quarter of 2024, with estimates falling 7% below the consensus. The revision is also based on the expectation of weaker cash generation leading to an increase in net debt on a sequential basis.
The firm has also revised its 2024 estimates for Eni's exploration and production (E&P) and, to a smaller degree, for its downstream operations. While the E&P segment's EBIT contribution is expected to rebound in 2025-2026, the profitability per barrel of oil equivalent (boe) is likely to be lower than previously estimated.
As a result of these adjustments, Stifel anticipates a downward revision in Eni's EBIT and net income for the years 2024-2026, with an average reduction of 13% and 24%, respectively. The analyst's commentary highlights these revised expectations, setting a cautious tone for the company's financial performance in the near term.
In other recent news, Italian multinational oil and gas company, Eni SpA, reported strong financial results for the first quarter of 2024, with a pro forma EBIT of €4.1 billion and a cash flow from operations of €3.9 billion. The company also reported a 5% increase in upstream production, attributing this growth to strategic acquisitions, including those of Neptune and Ithaca Energy (LON:ITH).
Morgan Stanley resumed coverage on Eni SpA, assigning an Equalweight rating influenced by the stock's performance relative to its sector. The firm, however, acknowledged potential risks to the consensus estimates for the company's financials.
Eni's stock rating was upgraded from Neutral to Buy by Redburn-Atlantic, reflecting a belief in the company's growth trajectory. The company is also making significant investments in technology and expanding its renewable energy and carbon capture and storage programs. Despite an increase in net debt due to these acquisitions, Eni anticipates a reduction in debt levels through asset disposals and working capital releases.
Furthermore, a new share buyback program has been authorized for up to €3.5 billion, with Eni expecting to distribute up to 60% of additional cash flow to shareholders. These developments underscore Eni's strategic growth initiatives and commitment to shareholder value.
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