Berenberg revised its earnings estimates for Galp Energia (GALP.LS), citing recent refining margin improvements and underlying commodity prices.
"We expect the refining business to be the main driver, but also expect solid performance in the upstream portfolio as Bacalhau (Brazil) continues to ramp up. Higher 2026 [cash flow from operations] estimates lead to an increase in our 2027 buyback estimate, but we also outline an initial view on the potential impact of the proposed solidarity tax in Portugal. While uncertainty remains regarding the structure and impact of the tax, we view it as a headwind and leave our price target unchanged at EUR22," analysts said Monday.
The research firm noted that refining strength drove a 44% increase in its third-quarter CFFO forecast for the Portuguese energy group, which now sits 15% above consensus, and supported higher earnings projections through full-year 2027. The increased cash flow assumption also boosted Berenberg's 2027 share buyback estimate by 19%, lifting the total projected yield to 8% from 7% previously.
As for the potential tax headwind, analysts initially modeled an "incremental" tax exposure of 240 million euros, though "considerable uncertainty" remains due to unclear tax structures, subsidiary profit details, and potential mitigation efforts by the company. "The tax is not expected to [affect] the downstream merger with Moeve, a firm agreement still expected in H2, but we view it as a likely headwind heading into Q4," the note said.
Berenberg maintained its hold rating on the stock.