ENI Stock and Beyond: What’s Next as Oil Price Volatility Persists? Analysts Share Their Outlook

What should investors make of ENI now that crude oil prices have retreated sharply from the highs reached during the US-Iran conflict?

That is the key question after the reopening of the Strait of Hormuz, a development that immediately prompted analysts to reassess the outlook for oil & gas equities, particularly ENI, the Italian energy major led by CEO Claudio Descalzi.

The sector had been one of the biggest beneficiaries of the sharp rally in crude prices, with both Brent and WTI repeatedly setting fresh highs during the escalation between Washington and Tehran.

While hostilities have officially eased following the temporary ceasefire reached in mid-June, geopolitical risks remain firmly on investors’ radar.

In fact, oil prices moved higher again today after Axios reported that Tehran had launched at least two missiles toward vessels transiting the Strait of Hormuz, underscoring how quickly supply concerns can return even after the waterway has reopened.

Against this backdrop, ENI shares, listed on Milan’s FTSE MIB, are trading more than 0.5% higher

The bigger question, however, is whether the stock can continue to outperform if crude prices fail to revisit the wartime highs, when Brent briefly climbed above $126 per barrel.

To assess the outlook, Money.it spoke with Eric Croak, President of Croak Capital and a portfolio strategist, as well as Saverio Berlizani, Market Analyst at ActivTrades.

Both highlighted not only ENI but also several other energy stocks they believe deserve investors’ attention.

ActivTrades: Shell and ENI remain Europe’s undervalued oil majors

According to Saverio Berlizani, Market Analyst at ActivTrades, the most compelling opportunities in today’s oil & gas sector include major US producers focused on operational efficiency, alongside undervalued, high-yield European names.

He says that the “best investment opportunities in the oil and gas sector include U.S. supermajors focused on production efficiency, such as ExxonMobil and Chevron, and undervalued, high-yield European giants like Shell and ENI”.

Berlizani remains constructive on ENI, arguing that the company continues to stand out within the European energy:

“ENI continues to stand out as an attractive investment opportunity within the European energy landscape, primarily due to its generous shareholder remuneration policy and the strength of its integrated operating model. However, the stock’s appeal depends heavily on the investor’s objectives, as the sector is exposed to commodity price volatility and the structural complexities of the green transition”.

ExxonMobil and Chevron remain top US picks

Eric Croak also sees compelling value across the sector:

“Shell and TotalEnergies both trade at 4-6x cash flow multiples while Exxon and Chevron trade at 8-10x. The European companies pay 4-6% in dividends AND retire 6-8% of their stock each year via buybacks. Cash returns beat production growth in a low-volatility, $80-barrel world, and that’s why the market is heavily discounting those names right now. In the U.S., Exxon still gets my vote to buy alongside Chevron given its breakeven costs are still sub $35 bucks on Guyana barrels”.

Among US producers, his preferred names remain ExxonMobil and Chevron, citing the exceptionally low production breakeven costs of Guyana’s offshore fields, which remain below $35 per barrel.

ENI still offers an attractive investment case

Croak is equally constructive on ENI, because of its “satellite model”:

“ENI still looks attractive to me, and the reason why is simple: satellite model. Spinning units like its retail power business and biofuels arm into separately capitalized businesses/SUVCOs just exposes value that’s being left off the consolidated share price. Total cash yield clocks in around 7 percent.”

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He argues that ENI’s strategy of separating businesses such as retail energy and biofuels into dedicated entities with independent market valuations allows the company to unlock value that is not yet fully reflected in the group’s consolidated share price.

The factors investors should watch

Despite his positive view, Croak believes investors should closely monitor two key factors.

The first is ENI’s relatively high debt levels.

The second is the significant ownership stake held by the Italian state, which can influence corporate strategy and governance. So, “just be mindful of the higher debt load and large state ownership stake here”, he told Money.it.

The Italian Ministry of Economy and Finance has de facto control of Eni SpA by virtue of interests held either directly or via the Cassa Depositi e Prestiti SpA (CDP).

Total of the shares held by Ministry of Economy and Finance and CDP SpA is 1,001,765,880, equal to 33.09% of the share capital.