RBC Capital Markets raised its price target and earnings forecasts for Repsol (REP.MC), as analysts expect higher refining margins for the Spanish energy company.
"With ongoing outages in the Middle East, Russian outages and depleted inventories leaving oil product supply particularly constrained, Repsol has seen refining margins climb higher qoq to ~$40 [per barrel quarter to date] in 3Q26, with a $10/bbl premium. This would leave the all-in margin nearly double the level seen in the most recent high prior to the Iran war ($24/bbl in 2Q22). The spot margin indicator of ~$50/bbl, with new highs reached in recent days, suggests further upward pressure on estimates, while Repsol noted it was not yet seeing any significant demand destruction in Iberia. We update our 2H26 margin estimates to $50/bbl in 3Q26 (all-in) and $30/bbl for 4Q26," the research firm said Thursday after hosting Repsol Chief Executive Officer Antonio Lorenzo Sierra for its Global Energy and Mining Back-to-School series.
RBC anticipates a "material upgrade" to the company's shareholder distribution outlook during its third-quarter results amid expectations of "extremely strong" free cash flow generation for the rest of 2026 and the conclusion of its ongoing 500-million-euro share buyback.
"We expect the company to come in around the lower end of its guided payout, and assume a EUR2bn buyback for the year (previously EUR1.5bn). We also upgrade our 2027-28 estimates on the back of enduring refining margin strength. Repsol is set to be a material buyer of the shares through this year and into next year, and we expect this to support both the shares and [dividend per share] growth," the note said.
Against this backdrop, RBC raised the stock's price target to 38 euros from 35 euros and maintained its outperform rating.