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Investing,com Bernstein downgraded Equinor to "market-perform" from its previous "outperform" rating, citing weaker earnings forecasts and reduced free cash flow projections that have prompted a 13% cut in the price target to NOK 275.
The analysts said the downgrade reflects the oil major’s recent trading update, lower production growth expectations, and normalization of midstream earnings.
Bernstein lowered its Equinor earnings per share estimates by an average of 13% annually for 2025 through 2027.
The revision reflects a weaker third-quarter performance, revised production growth of 6% over 2024-27 versus the company’s targeted 10%, and a below-guidance outlook for midstream MMP earnings beyond 2025, which Bernstein said have returned to pre-2022 crisis levels.
The brokerage also sharply reduced its expectations for share buybacks, noting that constrained free cash flow limits balance sheet capacity.
Share repurchases for 2026-27 are now forecast at $2-2.5 billion annually, roughly half Bernstein’s previous estimates.
This reduction brings Equinor’s total distribution yield in 2026 broadly in line with peers, down from previous top-of-sector levels.
Bernstein maintained its long-term DCF valuation framework and oil price assumptions of $70 per barrel, with $65 per barrel in 2026.
The brokerage noted that Equinor is more sensitive than peers to commodity price movements, estimating that a $1 per barrel change in oil price in perpetuity could move the fair value by approximately NOK 20, or more than 7% of the current price target.
The analysrs also flagged a new strategic risk following Equinor’s participation in Orsted’s recent rights issue. Bernstein said the oil major has shifted from a passive to an active shareholder, prompting speculation about a potential collaboration.
A joint venture merging renewable assets without cash injection could benefit Equinor’s free cash flow by moving cash-negative wind projects to an equity-accounted JV.
However, scenarios involving material cash contributions, such as acquiring Orsted minorities or a majority stake, would be dilutive to earnings per share and increase Equinor’s gearing, Bernstein said.