Equities
RBC Tweaks Estimates, Price Target for Repsol After Q1 Trading Update
RBC Capital Markets adjusted its earnings forecasts and price target for Repsol (REP.MC) amid a model update to reflect the Spanish energy group's first-quarter trading update and the research firm's revised commodity price deck."Repsol's trading update showed modest signs of downstream strength, with an average $10.9/bbl refining indicator, similar to 4Q, although this was clearly driven by a particularly strong March. Repsol notes refining margins in April have been volatile but have averaged ~$11.5/bbl (this is net of all variable costs, including transport), well below where we see prevailing margins. At a headline level, this could be seen as disappointing given where distillate cracks are on the screen; however, we think this reflects physical oil spreads, as well as timing effects between crude and product pricing. We've seen a number of 'messy' 1Q updates from the US refiners and XOM also over recent days, and Repsol as a coastal refiner may be more impacted by weaker capture than those in the US taking crude from local sources. We continue to see refining margins remaining structurally above mid-cycle levels through 2026 and into 2027, given tightness in distillate inventories, and see Repsol as a key beneficiary of this trend. In the upstream, production volumes were disappointing relative to our estimates, with some one-off impacts weighing on results," according to an April 10 note.As such, the research firm revised its EPS estimates for full-year 2026 through 2028 and cut its first-quarter 2026 adjusted net income forecast to 985 million euros from 1.09 billion euros, 2% lower than market expectations.Meanwhile, analysts lifted their price target for the outperform-rated stock to 32 euros from 29 euros. The upgrade accounts for the research firm's latest commodity price deck, which integrates higher 2026 to 2027 oil price forecasts and an $80 per barrel long-term Brent assumption.
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