Jefferies initiated coverage on Italian grid operator Terna Rete Elettrica Nazionale SpA with a Hold rating and a €9.80 price target. The firm cites stretched valuation despite the company's strong regulatory returns, which have delivered an average ROE of around 14% over the past five years, outperforming European peers.

Terna's favorable regulatory framework allows it to consistently generate a positive spread of approximately 250 basis points over the regulated return. Jefferies forecasts the company's Regulated Asset Base will grow at a 9% CAGR through 2029, powered by Italy's €18 billion energy transition investment plan. However, earnings growth is expected to lag.

The investment bank projects Net Debt/EBITDA will rise from roughly 5.0x to 6.0x by 2029. Valuation appears stretched, trading at a 20% premium to its FY27 RAB versus a historical average of 15%. This presents a key constraint for investors despite the company's robust growth prospects.