JPM | FTM | Today’s Research | Europe

Research evidence excerpt

JPM | FTM | Today’s Research | Europe

o accrue for a 60% payout from 2026E earnings and undertake a second tranche of share buyback of

€0.5bn in 2H 26; whether the announcement comes with 2Q or 3Q results is not a driver of our investment case. Our new Dec-

27 SOP-based PT is €41 (from 40 previously) driven by the EPS upgrades.

EU Oil & Gas (Matthew Lofting, CFA)

2Q Tactical Views; Refining best placed in a quarter of many moving parts

Setting the bar for 2Q reporting. Middle East de-escalation is the sector’s key near-term variable. EU Oils price performance

is correlating most closely to 1-2Y forward oil prices (over spot volatility) and the 2027 FCF yield is now 11.0% at $75/bbl Brent.

With that in mind, 2Q screens as strong absolute but backward looking (eg: avg oil price near $105/bbl vs spot $70-75). In

parallel, potential variations in O&G price capture, trading and cash conversion point to a wider than usual range around

consensus expectations. Against that backdrop, our tactical views into reporting are: 1) Refining is re-strengthening on tight

stocks, renewed supply constraints and a parachute effect vs. moderating oil prices. Longevity remains to be seen but, near

term, this favours downstream geared midcaps led by OW Galp and N Repsol; 2) OW Galp for 2H. A catalyst-rich outlook

creates scope to re-rate with less oil price dependency than peers. Results should also bring welcome FY upgrades, though the

Street appears to be in the right ballpark; 3) Majors. The backdrop limits relative 2Q conviction across the large-caps. We

favour OW TotalEnergies for sound cash conversion, deleveraging and potential for a further SBB increase to $2bn (’26 cash

yield 9.4%). High end financial leverage and corporate flux heighten the importance of strong EPS capture at N BP.