Update shared on 02 Dec 2025
Fair value Increased 4.97%Analysts have raised their price target for Ithaca Energy from £1.84 to £1.93. This change reflects underlying shifts in profitability and cash flow expectations, despite concerns over its premium valuation and the evolving U.K. tax environment.
Analyst Commentary
Analyst views on Ithaca Energy remain divided following recent updates to price targets and ratings. Their insights highlight both the company’s strengths and areas of risk. This reflects the changing landscape of the U.K. energy sector.
Bullish Takeaways
- Improved cash flow expectations continue to support upward price target revisions, despite industry headwinds.
- Profitability metrics are seen as robust, providing a buffer against market volatility and sector challenges.
- A proactive hedging strategy for 2026 may offer some protection against commodity price swings. This contributes to medium-term earnings stability.
Bearish Takeaways
- Current valuation is considered premium compared to peers, raising concerns over limited further upside.
- An unfavorable U.K. tax regime presents ongoing challenges to competitiveness and may restrict future growth opportunities.
- Shareholder cash returns have normalized at levels lower than industry benchmarks. This reduces the stock’s appeal for income-focused investors.
- Beyond 2026, limited gas hedging exposes earnings to greater commodity price risk. This adds uncertainty to the long-term outlook.
What's in the News
- Ithaca Energy has signed a farm-in agreement with Shell UK for a 50% working interest in licences P2629 and P2630, which include the Tobermory discovery. This agreement strengthens Ithaca Energy's presence in the West of Shetland gas hub (Client Announcements).
- Following completion of the farm-in deal, Ithaca Energy and Shell each hold a 50% stake in the Tobermory discovery. This deepens the strategic partnership between the two companies in the region (Client Announcements).
- Ithaca Energy has finalized the acquisition of an additional 46.25% stake in the Cygnus gas field from Spirit Energy. This increases Ithaca Energy's operated interest to 85%, with a payment of approximately £115 million made upon completion (Business Expansions).
- The Cygnus gas field acquisition adds 23 mmboe of 2P reserves and is expected to increase 2025 pro forma production between 12.5 and 13.5 kboe/d. This supports the company’s strategy of consolidating its UK Continental Shelf position (Business Expansions).
Valuation Changes
- Consensus Analyst Price Target has increased from £1.84 to £1.93. This reflects improving market expectations.
- Discount Rate has risen slightly, moving from 7.07% to approximately 7.16%.
- Revenue Growth forecast has fallen significantly, dropping from 3.64% to 0.91%.
- Net Profit Margin has edged up from 10.05% to 10.57%.
- Future P/E Ratio has declined marginally from 16.94x to 16.47x.
Have other thoughts on Ithaca Energy?
Create your own narrative on this stock, and estimate its Fair Value using our Valuator tool.
Create NarrativeDisclaimer
AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.