11:01 AM EDT, 07/29/2024 (MT Newswires) -- Eni (E) is showing progress in its "satellite" strategy for the energy transition by selling parts of its companies Plenitude and Enilive at much higher prices than their current value, which will help its debt and make its distribution plans "more defensive" compared to its competitors, RBC Capital Markets said in a note Monday.

"Sales for both Plenitude and Enilive provide significant markers that suggest Eni's share price is well below the sum-of-the-parts," RBC said.

Eni's accelerated asset sales in the upstream sector will help achieve its 8 billion euros ($8.65 billion) divestment target by the end of 2025 and strong valuations for these deals will improve the company's balance sheet and create growth opportunities, RBC said.

The company's payout ratio of 35% is "less aggressive" compared to peers but maintaining a strong balance sheet and sustainable distributions remains crucial in a weaker macroeconomic environment, according to the note.

The investment firm said Eni's high leverage has been a major concern for investors and the evidence of significant debt reduction will improve investor confidence.

RBC upgraded its rating on Eni's stock to outperform from sector perform, with a price target of 18 euros.

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