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Berenberg Ups Price Target, Forecasts for Repsol on Refining Margin Outlook, Expanded Share Buyback

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Berenberg raised its price target and earnings estimates for Repsol (REP.MC), citing rising European refining margins and the Spanish energy company's accelerating share repurchase plan.

"Repsol is the most exposed of the European integrated energy companies to the current strength in refining margins, which we expect will drive consensus upgrades for both Q3 and FY26, and we increase our price target to EUR31 (from EUR28). We update our model to incorporate the strong earnings beat and cash flow reported in the company's Q2 results (23 July). We also update for confirmation on the second tranche of the buyback and confirmation that a third tranche will be announced with the Q3 results in October - our updated buyback assumption is 13% ahead of consensus," according to a Monday note.

After delivering a second-quarter refining margin of $14 per barrel plus a $10/bbl premium, Repsol said it realized a $34/bbl margin in July so far, with a $9/bbl premium, which the research firm noted surpassed the consensus forecast of $13/bbl.

"Ongoing disruption in the Middle East, refinery outages in Russia and low product inventories are facing healthy demand, and we expect the market to remain tight in the near term," analysts added.

Accordingly, Berenberg upgraded its third-quarter indicator margin assumption, which helped raise the research firm's forecast for industrial business' adjusted net income by 100% to "just over" 1 billion euros. As a result, full-year 2026 group net income and EPS projections were increased by 16% and 17%, respectively.

The stock is still rated buy.

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