Robust Backlog And Expanding CCUS Will Shape Future Energy Infrastructure

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AnalystConsensusTarget
Consensus Narrative from 15 Analysts
Published
11 Dec 24
Updated
31 Jul 25
AnalystConsensusTarget's Fair Value
€3.16
29.3% undervalued intrinsic discount
31 Jul
€2.23
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1Y
8.3%
7D
-3.2%

Author's Valuation

€3.2

29.3% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update01 May 25
Fair value Increased 3.93%

Key Takeaways

  • Expansion into energy transition and digitalization is driving higher-margin, diversified revenue streams and greater operational efficiency.
  • Risk reduction in core business and stronger industry partnerships are enhancing earnings stability and long-term revenue visibility.
  • Persistent risks from legacy contracts, financial strain from asset-light strategies, and limited renewable experience threaten margin stability and long-term growth amid intensifying competition.

Catalysts

About Saipem
    Provides energy and infrastructure solutions worldwide.
What are the underlying business or industry changes driving this perspective?
  • A record-high, well-diversified order backlog and robust commercial pipeline (€53 billion) provide strong revenue visibility into 2025 and 2026, positioning Saipem to benefit from global energy infrastructure demand driven by population growth, urbanization, and heightened focus on energy security-supporting sustained revenue growth.
  • Increasing order intake and project awards in carbon capture (CCUS), decarbonization, and energy transition segments (€2 billion in CCUS projects currently), with continued expansion in engineering services and project management, are creating higher-margin, diversified revenue streams that should drive improvements in overall net margins as the energy transition accelerates.
  • Progress in derisking the onshore EPC business by shifting to reimbursable frameworks and selective bidding, alongside a declining legacy project burden (now < €100 million), sets the stage for continued margin expansion and reduced earnings volatility in future periods.
  • Execution of strategic cost containment and digitalization initiatives has already translated into improving EBITDA margins (now consistently above 11%), signaling further upside potential for net margin and cash flow conversion as operational efficiency gains scale.
  • Saipem's capital-light fleet strategy and deepening partnerships with supermajors and NOCs are optimizing asset utilization and increasing recurring revenue from long-term offshore projects, bolstering order intake resilience and long-term earnings visibility.

Saipem Earnings and Revenue Growth

Saipem Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Saipem's revenue will decrease by 0.1% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 2.1% today to 4.1% in 3 years time.
  • Analysts expect earnings to reach €636.5 million (and earnings per share of €0.31) by about July 2028, up from €328.0 million today. However, there is a considerable amount of disagreement amongst the analysts with the most bullish expecting €757.3 million in earnings, and the most bearish expecting €519 million.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 12.7x on those 2028 earnings, down from 13.7x today. This future PE is lower than the current PE for the GB Energy Services industry at 12.9x.
  • Analysts expect the number of shares outstanding to decline by 0.78% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 10.2%, as per the Simply Wall St company report.

Saipem Future Earnings Per Share Growth

Saipem Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Saipem's ongoing exposure to legacy projects-including continued provision charges and related earnings volatility-suggests a persistent risk of cost overruns or impairments on old contracts, which could negatively impact net margins and future reported earnings.
  • The company's asset-light strategy, with a growing reliance on leased vessels and chartered equipment, is increasing both lease liabilities and financial expenses; this constrains free cash flow and puts pressure on net profit, especially if market conditions tighten or project awards slow.
  • Increasing market competitiveness, especially in key regions such as Brazil and across the onshore and offshore segments, is leading to lower margins for new awards; intensified bidding pressure may erode future revenue growth and profitability as the project mix shifts.
  • While the current backlog coverage provides visibility for 2025 and 2026, Saipem's business remains highly exposed to cyclical investment decisions by oil majors and potential delays or deferrals in client final investment decisions (FIDs), particularly with evidence of tenders and awards being increasingly concentrated in the latter part of each year, introducing risk to revenue pipeline sustainability.
  • The company's limited track record and relatively small scale in renewables/EPC for green projects, compared to its oil and gas activities, may slow its ability to capture a meaningful share of the energy transition market, risking both medium
  • to long-term revenue growth and its capacity to offset the long-term decline in hydrocarbon project demand.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of €3.159 for Saipem based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €3.54, and the most bearish reporting a price target of just €2.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €15.4 billion, earnings will come to €636.5 million, and it would be trading on a PE ratio of 12.7x, assuming you use a discount rate of 10.2%.
  • Given the current share price of €2.3, the analyst price target of €3.16 is 27.2% higher.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

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.

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