In line, but outlook disappointed, as Middle East takes its toll

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Equity Research

10 August 2026

Tenaris

In line, but outlook disappointed,

as Middle East takes its toll

With Middle East disruptions continuing, Tenaris faces shortterm headwinds which stand against a backdrop of an

improving outlook elsewhere

Tenaris reported a largely in-line 2Q26 result, with EBITDA of US$649mn representing a

marginal 1% beat versus our estimate and in line with Bloomberg consensus. However, the

key takeaway was a softer than expected outlook for 2H26, with management guiding to

revenues and EBITDA broadly in line with 1H26 levels. This implies 2H26 EBITDA of ca.

US$1.39bn, around 6% below prior consensus expectations, with 3Q lighter than 4Q. As its

peer, Vallourec pointed out (see Vallourec: Improving markets dampened by near-term

unknowns 30 July 26), the disruption to Gulf shipments remains a headwind, although

management continues to point to improving North American activity, strengthening

pricing and a growing offshore backlog as key drivers of a recovery into 4Q26 and beyond.

The cash return framework also evolved, with the company doubling its interim dividend

and signalling dividends are now the preferred mechanism for shareholder distributions

rather than buybacks. As such, we see a positive trajectory for Tenaris, but the short term

issues are arguably higher than the street had factored in, the resulting stock fall of 7%

(versus 2% increase in WOGPLS Index) was a testament to that. However, with the

disruptions come a likely rebound when the situation normalises. The Middle East is, in

our view, set for a spending spree when it can and Tenaris will likely benefit. Hence, we see

the sell off as overdone. We are trimming our 2026 estimates by ca 4% at the EBITDA line,

leaving 2027 and 2028 broadly unchanged. Our EPS is cut by 2% for 2027F however on

removal of buybacks, trimming our PE based price target to US$80/ADR, unchanged at

EUR34.5/shr on a lower exchange rate. With 50% upside potential and clear earnings

momentum potential, we remain Overweight.

Middle East takes its toll: The in-line headline numbers continue to mask a significant regional

dislocation.…