Analysis by Morgan Stanley
Arthur Sitbon (analyst) highlights that Naturgy has a unique opportunity within the sector to pivot towards growth, supported both by the flexibility of its balance sheet and the recent simplification of its shareholding structure, whilst new analysis on cost savings and growth levers reinforces the view that the company can improve its EPS growth profile, placing medium-term earnings above the consensus. In this context, he believes the market still gives limited recognition to this turning point in the investment thesis, with the share trading at a discount of around 15% compared to peers in terms of 2027 estimated P/E, although the next upward move should be driven by solid short-term EPS momentum — with the potential for an upward revision of the 2026 guidance later in the year — alongside a gradual re-rating as the market grants greater credibility to an acceleration in medium-term EPS growth, supported by internal initiatives (self-help) and increased capex investment.
Recommendation: Upgraded from Equal to Overweight, Target Price €32 per share (up from €27)
