Business
Citi cuts Snam to 'sell' on EPS growth below peers, leverage constraints
Citi cuts Snam to 'sell' on EPS growth below peers, leverage constraints
About this update from Snam S.p.a.
** Citi cuts Italy's Snam MIL:SRG to "sell" from "neutral" as it expects a lower-than-sector-average long-term EPS growth and leverage constraints in 2025-26** It sees a 2% 5 year EPS CAGR for the gas grid operator that is three times lower than the 6% it anticipates for the sector average ** Snam's recent 920 million euros ($1.04 billion) acquisition of a 24.5% stake in Germany's Open Grid Europe (OGE) is "expensive" and carries an EPS accretion limited to 1%, Citi notes** At the same time, OGE's acquisition increases pressure on the "already stretched" Snam credit metrics, it says** As a result, the gas grid operator will have less flexibility to react to any negative market changes that may occur in 2025-2026, Citi adds** Out of 20 analysts that cover Snam, 12 rate the stock "strong buy" or "buy", five rate "hold" and three rate the stock "strong sell" or "sell"($1 = 0.8864 euros)