Repsol, the Energy sector company, was revisited by a Wall Street analyst today. Analyst Guilherme Levy from Morgan Stanley downgraded the rating on the stock to a Hold and gave it a €15.80 price target.
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Guilherme Levy has given his Hold rating due to a combination of factors influencing Repsol’s current market position. The company’s refining margins experienced a significant boost in the third quarter, leading to a notable outperformance compared to its peers. However, Levy anticipates that these margins will weaken in the future as certain temporary factors, such as the Dangote outage, begin to dissipate and new supply enters the market.
Despite the recent rally in Repsol’s shares, Levy sees limited potential for further valuation increases, prompting a downgrade to an Equal-weight rating. The company’s free cash flow is currently near break-even before any asset sales, and its payout yield is similar to that of its peers. While there are some positive aspects, such as an upcoming liquidity event in exploration and production and exposure to US gas prices, these are not enough to warrant a more favorable rating at this time.
Levy covers the Energy sector, focusing on stocks such as Technip Energies NV, Saipem SpA, and Repsol. According to TipRanks, Levy has an average return of 22.7% and an 80.00% success rate on recommended stocks.
In another report released on October 8, RBC Capital also maintained a Hold rating on the stock with a €14.00 price target.