RBC Capital Markets revised its model for Repsol (REP.MC), tweaking its earnings estimates for the Spanish oil and gas giant, noting a "strong" second-quarter production update underscored by robust downstream performance.
"Repsol's refining margin indicator was $14 [per barrel] in 2Q, with the premium to this expected to be in the region of ~$10/bbl. An all-in margin of $24/bbl was ahead of our estimate ($22/bbl) and ahead of market expectations. On top of this, European chemicals margins have been particularly strong in 2Q, and we expect Repsol's chemicals division to flip from loss making to profit," the research firm said Wednesday.
"We question the durability of this, but this drives upside to our 2Q numbers. Somewhat offsetting this was a slightly weaker production number in the upstream. However, Repsol noted exit rate production of [590,000 barrels of oil equivalent per day], well above the 558kboed reported in 2Q," analysts added.
RBC sees room for higher share buybacks in 2026, with the potential for management to upgrade the annualized buyback to 1 billion euros from 700 million euros in the second quarter before another reassessment in the third quarter. Backed by an above-consensus oil deck of $89 per barrel and an all-in refining margin estimate of $18/bbl, the research firm projects a full-year 2026 repurchase total of 1.3 billion euros.
Ahead of the company's second-quarter earnings report on July 23, the stock is maintained at outperform, with a price target of 32 euros.