Spotlight on allowed returns into ‘27E, we remain at Underperform

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Spotlight on allowed returns into ‘27E, we remain at Underperform

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Snam

Spotlight on allowed returns into ‘27E, we

remain at Underperform

Reiterate Rating: UNDERPERFORM | PO: 5.70 EUR | Price: 6.17 EUR

High visibility but still some uncertainties 21 July 2026

We revisit our investment case on Snam ahead of Q2’26 results and retain our Equity

Underperform rating, albeit with a new PO of €5.7 (€5.3 previously). Snam offers highly

predictable and inflation-linked earnings. However, we are concerned that: (1) our

Key Changesregulated WACC MTM is around the 30bps trigger level, creating a risk of a return cut in

2027E, (2) Snam’s medium-term growth could be relatively muted (potentially lower (EUR) Previous Current

capex in legacy gas networks, slow rollout of H2 investments, more than offsetting Price Obj. 5.30 5.70

progress with CCS), although the group carries no risk of an equity raise, in our view. We 2026E EPS 0.44 0.43

make no material changes to 2026E EPS, trim 2027-28E EPS by 2%, but raise 2029-30E 2027E EPS 0.45 0.44

EPS by 2%, given higher output-based incentives in the outer years. 2028E EPS 0.47 0.46

Focus on the trigger mechanism through 30 September Marcin Wojtal >>

Research Analyst

Our MTM calculation now implies a 32bps reduction in the allowed WACC for the Italian MLI (UK)

gas transportation, or a more comfortable 26bps should France be excluded from the +44 20 7996 1070 marcin.wojtal@bofa.com

basket of comparable countries. Meanwhile, for the regassification activity, the MTM

Peter Bisztyga >>

suggests a 45bps reduction in WACC or a more limited reduction of 37bps with France Research Analyst

removed from the basket. Should the 30bps threshold be reached, we estimate a 4.1% MLI (UK) +44 20 7995 0535