Repsol 2Q 10% ahead on refining strength; More to come on buybacks

Research evidence excerpt

Repsol 2Q 10% ahead on refining strength; More to come on buybacks

Matthew Lofting, CFA AC Europe Equity Research

(44-20) 7134-6301 23 July 2026 J P M O R G A N

matthew.lofting@jpmorgan.com

Investment Thesis, Valuation and Risks

Repsol (Neutral; Price Target: €22.50)

Investment Thesis

Our N rating on Repsol reflects moderating EPS momentum after it delivered leading EU

Oils price performance since beginning 2025 on: 1) Diesel superiority. A top end of EU

Oils 7% EPS sensitivity per $1/bbl refining margin provides a strengthened hedge against

two-way O&G macro conditions and is diesel geared through a leading >50% middle

distillate (diesel/jet fuel) product yield; 2) Leading beneficiary of OPEC+ induced

widening in crude price diffs. Accelerated tapering of voluntary OPEC+ cuts is likely to

see more mid/heavy grade (lower value) crudes return to market. This ought to widen light-

heavy price diffs; 3) Aggregate R&M strength. At a combined 40-50% of operating profit.

The marketing/ customer unit is performing well and this represents a meaningful and

arguably underestimated oil hedge.

Valuation

Our Jun-27 PT is €22.5. Our price target is set as an equal-weighted blend of SOTP and

2027E PER. Set against a sector average 15% SOTP fair value discount starting point, we

apply a 10% discount to the businesses Repsol has crystallised minority value in (E&P,

Renewables) with the 5% retained to reflect the minority nature of the transactions and

ongoing operational/macro exposures. On multiples, we target a 15% sector discount to an

EU mkt 2027 forward median PER of 14.0x; we then adjust for Repsol’s historical discount

to the sector and the aforementioned overlays, which gives a target 8.6x on 2027E EPS at

$75/bbl Brent.

Risks to Rating and Price Target