Berenberg sees lower returns for Italian utilities on WACC trigger

** Berenberg says it expects Italian energy regulator ARERA to trigger a weighted average cost of capital (WACC) mechanism and limit allowed returns for Italian utilities in 2027

** It notes that worries over expected lower allowed returns have contributed to share price declines this year

** While the broker sees it priced in for Snam SRG.MI and Terna TRN.MI, it says Italgas IG.MI "has fallen too far"

** It upgrades the stock to "buy" from "hold", trimming its PT by 4.5% to €10.50, while keeping its "hold" rating on Snam and Terna

** Berenberg says a 30 basis points cut in returns brings the estimated EPS for Italian utilities 2027 EPS down by 4% for Italgas and Snam and by 5% for Terna