Berenberg reaffirmed its buy rating on Neste (NESTE.HE), noting that renewable tailwinds are becoming "structural" and consensus has yet to reflect the margin upside.
"The acceleration in Neste's share price this year has partly been driven by surging diesel prices and refining margins linked to the Iran conflict. Beneath the surface, however, renewable fuels are emerging from a cyclical trough into a structural supply deficit, fuelled by aggressive policy mandates in Europe and the US," according to a Wednesday note. "With less than 5m tons of financed renewable additions slated beyond 2026, demand is set to outstrip supply, resulting in sustained product premiums."
Accordingly, the research firm raised its 2027 earnings estimate for the Finnish oil refiner by 44%, while modeling sales margins for Renewable Products at $850 per ton, above Visible Alpha's consensus of $750 per ton. Analysts also increased their EPS estimates for 2026 and 2027 by 15.9% and 44.3%, respectively, boosted by higher margins.
"Trading at 7.2x 2027E EV/EBITDA and 11.6x P/E, Neste offers an attractive entry point into a high-return market leader (15% ROCE) ... While a swift de-escalation in Middle East tensions could pressure headline diesel cracks, we would likely view any resulting share price volatility as a buying opportunity. This perspective is supported by the multi-year durability of Neste's renewable fuel premiums," Berenberg said.
As such, the stock's price target was raised to 40 euros from 36 euros.