Goldman Sachs has moved Snam SpA to a buy recommendation from neutral and increased its 12-month price target to €6.90 from €6.50. The new target implies about 9.7% upside from Snam's closing price of €6.29 on Feb. 16. The upgrade comes ahead of Snam's Capital Markets Day scheduled for March 5 and reflects the bank's view that the company will present a materially larger capital expenditure program covering the 2026-2030 period.
Expected capex and the rationale
The analysts at Goldman Sachs estimate Snam will allocate approximately €14 billion to capital expenditures across 2026-2030. That figure is roughly 15% higher than the €12.4 billion target outlined in Snam's January 2025 plan. Goldman projects annual capital spending to remain near €3 billion annually through the end of the decade, with about 89% of that investment directed toward core gas infrastructure.
Drivers: a reconfigured gas import mix
Goldman Sachs highlights structural changes in Italy's gas import mix as the central justification for the higher spending outlook. Since 2019, the bank notes, southern entry points have risen to account for roughly 50% of Italy's total gas imports versus about 20% previously, while northern supply routes have fallen from roughly 60% to 15%. The analysts characterize Italy's position as shifting "from a net gas receiver to a key conduit for gas flows from North Africa into the rest of Europe." They link part of this transformation to the European Union's approval of a full phase-out of Russian gas imports by the end of 2027.
According to Goldman Sachs, these changes necessitate further reinforcement of the transmission network. Planned priorities include strengthening the south-to-north backbone capacity, upgrading transmission assets around newly added LNG nodes and expanding export interconnections toward continental Europe.
Earnings outlook and valuation
On the profit front, Goldman Sachs projects a 5% compound annual growth rate for EPS over 2025-2030, a pace the firm describes as roughly double the growth rate embedded in consensus estimates. The bank's net income forecast for 2030 is €1.80 billion, which it says is about 12% higher than the Visible Alpha Consensus Data figures.
Using its 2027 estimates, Goldman Sachs values Snam at about 13.5 times price-to-earnings, which the firm notes represents a double-digit valuation discount to comparable regulated peers Terna and Redeia. The analysts added that "despite faster earnings growth, Snam trades on a c.20% discount to peers," and argue that accelerating core capex combined with improving earnings momentum should support a re-rating.
Balance sheet and potential funding options
Goldman Sachs expects adjusted funds from operations to net debt to remain above 12% through 2030, which is modestly higher than the 11.7% average referenced in the prior Capital Markets Day materials. Net debt to regulatory asset base, the analysts estimate, will be around 60% across the period. They also flag the possibility of a strategic review of Snam's associates portfolio as an additional source of funding flexibility. The associates cited include stakes in TAG Austria (89%), Terega France (41%), Sea Corridor (50%) and Italgas Italy (11%). Goldman clarifies this potential review is not included in their base case assumptions.
Downside risks
The analysts identify several key risks that could undermine their positive outlook. These include the possibility of capex falling short of the bank's expectations; declines in inflation and interest rates that could lower the allowed regulatory return; shortfalls in regulated incentive income; and delays or execution challenges in multi-year infrastructure projects.
Goldman Sachs' upgrade and its expectations for higher capital spending underline how changes in supply routes and regulatory environments can reshape infrastructure spending needs and investor valuations. Market participants will be watching Snam's Capital Markets Day closely for confirmation of the updated investment plan and any commentary on timing and funding.