UBS cuts Repsol stock rating to neutral, raises target to €13.50

On Friday, UBS analysts, led by Henri Patricot, adjusted their stance on Repsol SA (REP:SM) (OTC: OTC:REPYY), downgrading the stock from Buy to Neutral, while simultaneously increasing the price target from €13.00 to €13.50. This decision comes in the wake of the company’s fourth-quarter 2024 results and its updated outlook for 2025. The $15.93 billion market cap company currently trades at $13.72, with InvestingPro analysis indicating the stock is undervalued based on its Fair Value estimates.

The UBS team acknowledged that Repsol’s robust performance and recent management updates have largely addressed short-term investor concerns. Despite this, the analysts decided on a downgrade, citing the stock’s considerable appreciation, which included an 8% rise on Thursday and a remarkable 16.77% increase year-to-date. According to InvestingPro data, the stock generally trades with low volatility and maintains a healthy 2.8% dividend yield.

The analysts at UBS believe that while there may be continued positive momentum, with consensus earnings forecasts potentially increasing (UBS estimates a 17% rise in 2025 net income), the potential for further stock price growth appears more constrained. They have also noted that the risks to key factors influencing Repsol’s share performance, specifically European refining margins and US gas prices, have escalated as both have exceeded UBS’s projections for the year. Trading at a P/E ratio of 7.48, the company maintains an overall GOOD financial health score according to InvestingPro, which offers 12 additional key insights about Repsol’s performance and outlook.

Repsol’s recent financial results and 2025 outlook seem to have been favorably received by the market, leading to a significant uptick in its share price. However, UBS suggests that the current valuation may already reflect an improved outlook, limiting the room for additional gains.

Investors and market watchers will likely monitor how Repsol’s stock responds to the revised rating and price target in the context of UBS’s observations about the risks to the company’s key earnings drivers.

In other recent news, Repsol SA has been upgraded by UBS analyst Henri Patricot from Neutral to Buy, with the price target increased from EUR11.50 to EUR13.00. This upgrade is based on UBS’s optimistic outlook for Repsol’s prospects in 2025, particularly in relation to refining margins and macroeconomic conditions. UBS has noted a potential turning point for Repsol, driven by a rebound in refining margins, which are pivotal to the company’s stock performance. The firm anticipates stable oil prices and a rise in US gas prices, which could enhance Repsol’s earnings and shareholder returns beyond current expectations. UBS has revised its 2025 earnings per share forecasts for Repsol upward by 17%, positioning its estimates 8% above the consensus. The gap between UBS’s forecasts and the consensus could widen to nearly 20% if US gas prices increase as projected by the forward curve. UBS’s analysis underscores potential upside risks to consensus estimates for Repsol’s earnings and returns. This recent development suggests that Repsol may be well-positioned to capitalize on prevailing industry trends and macroeconomic factors.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.