Gas price surge propels Italgas and Snam to the top of the FTSE MIB

(Il Sole 24 Ore Radiocor) - The latest surge in gas prices, which on the eve of the announcement had risen to just under 100 euros per megawatt-hour – a four-year high – is fuelling Italgas and Snam on the stock market. Two factors are supporting the share price of the company led by Agostino Scornajenchi, which on Friday will celebrate the 85th anniversary of its foundation (originally established on 30 October 1941): the positive market forecasts ahead of the third-quarter results due to be published on 11 November, and the final guidelines for the 2028–2031 regulatory period for gas transmission published by ARERA.

From a strictly financial perspective, analysts at Equita (who have a ‘Buy’ rating on the share and a target price of €6.60) expect “growth driven primarily by the regulated business, with an overall performance consistent with the achievement of our estimates and the 2026 guidance: EBITDA of around 3.1 billion, adjusted net income of over 1.45 billion and NFP of -18.9 billion’. However, it is on gas transmission that the experts are focusing in particular. On 22 October, ARERA, the Italian Regulatory Authority for Energy, Networks and the Environment, published consultation document 381/2026/R/Gas, containing the final guidelines on gas transmission tariffs for the seventh regulatory period (2028–2031). Snam Rete Gas and SGI (Società Gasdotti Italia), which operate the national gas pipeline network, account for around 99 per cent of the sector’s revenue. Comments must be submitted by 22 December, and the final decision is expected by March 2027.

According to Intermonte (Outperform rating and target price of €6.90), at first glance the key factors relate primarily to return on investment. In this regard, the brokers point out that ‘the current methodology for work in progress is confirmed, standing at 4.2 per cent based on the 2026 parameters. The WACC penalty on certain new projects falls from 15–20 per cent to 10 per cent and is linked to a benefit-to-cost ratio of less than or equal to two in the most conservative scenario’. The proposal to eliminate, from 2028, the 100-basis-point premium on 2014–2016 investments remains; ARERA states that this has generated approximately 20 million annually since 2017.

Another aspect concerns fully depreciated networks. In this regard, the incentive – totalling approximately 62 million in 2027 – is maintained, excluding critical assets, those scheduled for replacement and those that have not been used in the previous three years. The proportional reduction in the incentive for under-utilised assets has been scrapped. With regard to operating costs, the ‘baseline adjustment based on historical efficiencies’ has been removed, whilst, in terms of capital expenditure efficiency, the ‘symmetrical bonuses/penalties amounting to 30 per cent of the deviation between the ex ante reference cost – subject to verification, including via benchmarking – and the actual cost, with a 3 per cent allowance’. In light of this, Intermonte views “the changes compared with the first consultation positively, particularly regarding work in progress, the incentive for depreciated networks and the baseline for operating costs”. However, some restrictive elements remain, “including the removal of the premium for regulatory lag and exposure to penalties for capex variances. The overall impact will depend on the scope of investments subject to reduced remuneration and assets still eligible for incentives, as well as on the WACC and gearing, which will be defined separately.”

Positive views have also been expressed by Banca Akros (Neutral rating and a target price of 6.60 euros): the final text, the investment bank’s experts explain, “confirms the removal of the regulatory delay premium, amounting to around €20 million per year, but is less onerous than the May proposal with regard to works in progress and the selectivity of investments. Snam, which owns around 93 per cent of the transmission network, will bear the brunt of the impact. The main variable still to be defined is gearing, the review of which has been deferred to the 3PWACC process’.