Ithaca Energy Shares Reverse Lower: Goldman Sachs Downgrades to ‘Sell’

Ithaca Energy shares are under significant pressure today following a downgrade by Goldman Sachs, sending the stock sharply lower. The investment bank's decision to lower its rating to ‘Sell' has contributed to a wave of selling, impacting the company's market capitalization.

London-listed Ithaca's share price is currently trading down 11.78% at 206p, a substantial decline prompted by Goldman Sachs' revised outlook. The firm's analysts cited valuation concerns, increased exposure to the European gas market, and an uncompetitive UK tax regime as primary drivers for the downgrade. Goldman Sachs set a price target of 180p, indicating further potential downside.

This contrasts sharply with the stock's performance earlier in the year, having surged approximately 73% year-to-date before this correction.

The downgrade stems from a belief that Ithaca Energy's shares had become overvalued relative to its peers, trading at a premium despite the challenges posed by the current UK tax environment. Goldman Sachs highlighted that cash returns to shareholders have normalized below peer levels, and while the hedging program is supportive through 2026, gas hedging becomes limited from 2027. This raises concerns about future revenue stability in a potentially oversupplied gas market.

Adding to the downward pressure, major shareholders Delek Group and Eni previously reduced their stakes in September, selling a combined 3% of the company at a discounted price of 213.75 pence per share. This sale, executed at a 10% discount to the previous day's closing price, triggered a nearly 17% drop in the share price at the time, demonstrating the stock's sensitivity to large transactions.

The combination of a significant analyst downgrade, prior stake reductions by major shareholders, and earlier financial performance concerns paints a complex picture for Ithaca Energy. Markets will be closely watching how the company responds to these challenges and whether it can regain investor confidence in the coming months.