Repsol gains market following through shareholder care and green business | Financial markets

Joy at Repsol. The energy company’s shareholders have benefited from an accumulation of positive news that has lifted the stock to November highs, up 9.5% year-to-date. Additionally, there is growing optimism in the market regarding value, with buy recommendations currently standing at 73.5% of the total; those to be preserved are 23.5%, and only 3% are for sale. The firm is surrounded by optimism, despite the fact that the price of oil has been below $100 per barrel for some time.

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Joy at Repsol. The energy company’s shareholders have benefited from an accumulation of positive news that has lifted the stock to November highs, up 9.5% year-to-date. Additionally, there is growing optimism in the market regarding value, with buy recommendations currently standing at 73.5% of the total; those to be preserved are 23.5%, and only 3% are for sale. The firm is surrounded by optimism, despite the fact that the price of oil has been below $100 per barrel for some time.

The price began to revive with the presentation of 2023 results, which turned out to be one of the best, if not extraordinary, in its history and exceeded forecasts. “It was supposed to be a transition year after a very good 2022, but the balance was better than expected,” says Alberto Roldan, consultant at Metagestion.

Another boost for Repsol was the announcement of dividend growth averaging 3% a year from 2024 to 2027 (a period that includes a new strategic plan) and a new share buyback program of up to $5.4 billion. “This news confirms our positive view of the company. “We estimate an attractive shareholder return of 13.8% (estimated 2024 dividend yield of 7% and buyback yield of 6.8%), which is one of the highest in our review of EU oil majors,” Goldman Sachs comments. The bank believes the sector is at a “turning point where the valuation discount of European companies relative to US companies is beginning to change.” The former have entered a phase of cash flow-generating growth, supported by higher commodity prices, higher margins and higher volumes, accompanied by continued capital and cost discipline.” TotalEnergies, Shell, BP and Equinor

The path to the energy transition is another message that has a positive impact on the market. Repsol’s goal is to achieve total renewable fuel production capacity of 1.5 to 1.7 million tons in 2027 and 2.7 million in 2030 in the Iberian Peninsula and the United States, and to become the market leader in this segment. “She is positioned as an industry leader with the ability to adapt to a changing environment and make decisions that enable long-term growth and sustainability. Despite challenges such as fluctuating crude oil prices and the impact of new taxes, the company continues to focus on generating attractive returns for investors while maintaining a strong commitment to the transition to cleaner and more sustainable energy sources, which demonstrates the vision and strategy that this can be achieved,” says Javier Molina, eToro analyst.

Despite “the fact that the environment is not risk-free”, Pablo Fernandez de Mosteirin of Renta 4 is confident in the company’s “ability to execute, as well as the favorable pricing environment and refining profitability, which should continue to act as a catalyst for appreciation.”

For her part, Bankinter’s Pilar Aranda highlights that Repsol “has a healthy balance sheet, trades at attractive multiples, is increasing its dividend yield and is increasingly operating a more diversified business with greater reliance on renewable energy.” Despite this, he maintains a “conservative approach to forecasts as the crude oil price trend is bearish due to lower demand and the green boom.” BofA, for its part, perceives the situation more critically. “While Repsol and OMV (the Austrian oil company) have delivered positive shareholder returns, we continue to see significantly lower underlying cash flow sustainability than their peers,” he says.

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