Shares of Italgas SpA (BIT:IG) rallied on Tuesday to their loftiest point since April 21 after Citi lifted its recommendation on the Italian gas distributor to Buy from Neutral. The broker said the change in stance reflected signs that tender activity in Italy's gas distribution sector is picking up, expectations for stronger merger synergies and the prospect that the company may set higher long-term targets at an upcoming investor event.
Price reaction and new target
The stock advanced 2.24% to trade at 10.46 euros, marking its highest closing level in almost two months. Citi also raised its price target on Italgas to 11.6 euros.
Capital markets day
Italgas' capital markets day is scheduled for June 23. Citi noted the event as a potential catalyst for the company to formalise more ambitious long-term objectives.
Tender process acceleration
Citi characterised a long-awaited acceleration in Italy's gas distribution tender cycle as beginning to materialise after years of delay. The bank expects a faster pace of awards in 2026, forecasting six to eight tender wins that year compared with a historical average of roughly one award per year.
Analyst Ella Walker-Hunt wrote that "2026 marks a clear inflection point," and cited concrete signs of momentum: four tenders already awarded this year, two currently under evaluation and six for which invitations to tender have been issued.
Higher synergy and earnings assumptions
Citi also raised its projection for synergies stemming from Italgas' acquisition of 2i Rete Gas, now forecasting 300 million euros of synergies by 2031 versus a prior estimate of 180 million euros. The broker increased its forecast for Italgas' earnings-per-share compound annual growth rate to about 10% through 2031, up from a previous roughly 8% assumption. Citi's 2031 EPS estimate of 1.16 euros sits about 9% above current market consensus.
Valuation context
Even with what Citi described as sector-leading earnings growth prospects, the broker noted Italgas trades at a significant discount to other regulated European utilities. Citi estimates the shares are trading at 9.8 times 2030 earnings, versus a peer average of around 13.8 times.
Investors will likely watch developments at the June 23 capital markets day closely, as Citi's upgrade and revised assumptions hinge on the timing of tender awards and the realisation of merger synergies.