Enagás SA shares climbed sharply on Friday after Spain's Comisión Nacional de Mercados y la Competencia (CNMC) released a draft regulatory framework for gas transportation and regasification covering 2027-32 that contained much smaller revenue reductions than market participants had feared.
On the session, the Spanish gas transmission system operator's stock traded at €16.61, up from €14.66 in the previous session, on a volume of 2.78 million shares - more than double the reported average daily volume of 1.20 billion.
The CNMC's late-Thursday draft proposed average revenue declines of 7% for transportation and 1% for regasification compared with the current regulatory period. By contrast, if the existing regulatory framework had remained in place the draft suggested those cuts would have been 27% and 25% respectively.
Investment banks reacted by flagging material upside to Enagás' near-term revenue and earnings forecasts. J.P. Morgan estimated Enagás could record between €650 million and €750 million of incremental revenues in 2027 alone, reversing an earlier view that expected a drop of approximately €7 million. The bank also indicated the scenario could drive potential earnings-per-share upgrades of more than 20% in a best-case outcome.
UBS offered a more measured quantification, suggesting the proposal could add up to €75 million per year to its revenue projections for 2027-32. UBS translated that uplift to about €1.70 per share, or roughly 11% above its existing €15.05 price target. Both J.P. Morgan and UBS maintain a Neutral rating on the stock.
In terms of regulatory design, the CNMC left Enagás' net regulated asset base structure unchanged but proposed a 32.6% update to capital expenditure standard values to reflect inflation. The draft also replaced the current demand-linked RCS incentive with three new mechanisms intended to reward procurement efficiency, asset reliability and biogas usage. The CNMC said total incentives under the new system would be roughly 90% higher than under the previous framework.
Both banks cautioned on the durability and preliminary nature of the impacts. J.P. Morgan noted that a portion of the revenue uplift reflects recovery of operating cost underperformance from the prior regulatory period and is therefore unlikely to be recurrent beyond 2032. UBS emphasized the draft is subject to consultation and change, with the consultation open until April 27 and final regulatory documents expected before the end of September.
UBS's published forecasts include Enagás earnings per share of €1.01 in 2028, and a maintained dividend of €1.00 per share through 2030. Based on UBS's estimates, the stock trades at 14.5 times its 2028 earnings projection, compared with a peer average of 15.2 times.
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