In a report released yesterday, Sasikanth Chilukuru from Morgan Stanley upgraded Repsol (0NQG – Research Report) to a Hold, with a price target of €13.40.
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Sasikanth Chilukuru has given his Hold rating due to a combination of factors. Despite Repsol’s better-than-expected guidance for 2025 cash flow from operations and share buybacks, the stock’s valuation remains a concern. Although the company’s refining margins have increased and production is expected to be at the upper end of the guided range, these improvements are somewhat offset by the undemanding free cash flow yield, which is among the lowest in the sector.
Additionally, while Repsol’s distribution yield is notably high and ranks in the top quartile of the sector, it is not entirely supported by organic free cash flow. The company’s financial framework remains tight, despite improved cash flow forecasts, which suggests a cautious outlook. Consequently, these mixed factors contribute to the decision to maintain a Hold rating on Repsol’s stock.
0NQG’s price has also changed slightly for the past six months – from EUR12.699 to EUR12.789, which is a 0.71% increase.