Ithaca Energy Plc shares climbed just over 6% on Monday following a material upgrade from Jefferies, which lifted its price target on the stock to 350p from 210p and maintained a "buy" recommendation. The broker pointed to the company's changed profile after its business combination with Eni UK in April 2024 as a core reason for the more bullish stance.
How Jefferies derived the new target
Jefferies said the 350p target represents an average of two valuation approaches. One component is a total net asset value equivalent to 238p per share. The other is an EV/EBITDA-based valuation of 463p per share, which uses a 4.75x multiple applied to average 2026-27 estimates. That multiple was increased from 4.5x in the broker's prior analysis. Following the combination, Eni holds a 35.9% stake in Ithaca.
Upgrades to cash flow, revenue and profit
The brokerage raised its 2026 free cash flow estimate for Ithaca by 79%, to $952 million, a level Jefferies says implies a roughly 15% free cash flow yield at the current share price. Revenue for 2026 was lifted 22% to $3.61 billion, while EBITDAX was increased 30% to $2.62 billion.
On the bottom line, Jefferies' figures show net profit swinging to $671.9 million in 2026 from a net loss of $84.1 million in 2025. The 2025 result also missed Jefferies' earlier estimate of a $41.3 million loss by a wide margin, the note said.
Production and guidance
Despite the stronger financial outlook, Jefferies trimmed its production forecasts. The 2026 output estimate was reduced to 125,706 barrels of oil equivalent per day (boe/d), down 7% from the prior estimate of 135,071 boe/d. For 2027, the forecast was cut 6% to 135,903 boe/d. Ithaca's full-year 2026 company guidance remains at 120,000-130,000 boe/d.
Potential strategic moves and market structure
Jefferies flagged media reports, referencing the Financial Times, that have suggested discussions between BP and Ithaca over a possible UK North Sea transaction that "could almost double ITH’s current c.120kboe/d." The analysts noted that the companies involved had not commented. In its research note, Jefferies observed that "It is reasonable to see ITH as able to consider & execute such a deal."
The broker also said it "would not be surprised to see an ITH equity placing," pointing out the stock is trading at a premium to the September 2025 placing price of 213.75p per share, which was conducted at a 3% discount. Jefferies noted that a placing could raise the company's 13.6% free float - a level the broker described as a barrier to broader investor participation in the equity.
Balance sheet, dividends and valuations
Jefferies expects net debt to fall to $782.7 million by end-2026, down from $1.26 billion at the end of 2025 - a projected 27% reduction. The broker increased its 2026 dividend per share estimate to $0.28, a 36% rise from its prior $0.21 estimate. Ithaca has guided to pay dividends equal to 30% of post-tax cash flow from operations. Jefferies said the company's guidance range of $470 million to $520 million for post-tax operational cash flow is currently on track to come in "over $500 million."
On a reserves basis, Ithaca trades at an EV/2P reserves multiple of $17.80 per barrel, which Jefferies says is the second highest among 18 listed exploration and production peers it tracks. Only Aker BP is higher at $20.60 per barrel, while the peer average stands at $9.20 per barrel, according to Jefferies' estimates and FactSet data.
Risk-reward scenarios
Jefferies outlined a 12-month upside scenario that carries a 450p target and a downside scenario at 165p, yielding an implied upside-to-downside ratio of 3.03-to-1.
Market reaction and context
The stock's intraday move reflected investor response to the broker's upward revisions to cash flow, revenue and profit forecasts, combined with the improved valuation multiple and strategic potential tied to the Eni combination and possible transactions in the UK North Sea.
Jefferies' note ties together improved near-term financial metrics, a strengthened balance sheet outlook and an elevated valuation multiple to justify a materially higher target, while acknowledging production assumptions have been trimmed and that corporate actions such as a placing or an asset deal remain possibilities the market will watch closely.