Tuesday, December 7

Optimism about Repsol points to a double-digit recovery

Repsol continues this week in a downtrend less pronounced than the previous one, when it starred in seven downward sessions in which more than 7.5 percent was left, but the continuity of this depression does not change the upward perspectives of experts such as Victor Peiro, director of analysis of GVC Gaesco.

Although the actions of Repsol They do not finish recovering from the punishment suffered after the presentation of their quarterly accounts, in which the group reported the 1,939 million it earned until September and the increase in the dividend of 5 percent, Peiro maintains its bet on the company.

“Many times the responses of the markets to the results are not directly proportional to what they have presented,” he said. Peiro in the podcast of finanzas.com.

Repsol’s room for improvement

Peiro argues in his analysis that the company was excessively penalized during the pandemic, being impacted by speculation about the non-use of oil and its possible drop in prices.

Reality, instead, brought both a bullish rally that took oil prices to their highest in seven years and a recovery of Repsol which still has a margin. In fact, At GVC Gaesco Valores they calculate a target price of 13 euros per share, which yields a bullish margin of 12 percent.

At the market opening in Spain this Thursday, November 18, Repsol has suffered a small decrease of 0.96 percent compared to the starting 10,858 euros. And the target price that Peiro marks from GVC Gaesco it is 12 euros per share.

The analysis of Peiro It coincides with the one carried out by different experts consulted by Finanzas.com at the end of October, where the least optimistic saw Repsol at 12 euros, while on the optimistic side they placed the company at 15.50 euros.

Francisco Sainz, chief investment officer of Imantia, also estimated that the listed company had a margin of 10-15% increase for recover its price to pre-Covid 19 levels.

For Peiro, the negative reaction of the market to the results is more linked to the doubt that some international investors may have about the investment strategy of the company in alternative energies, than to the results.

These hesitant investors, explains the director of analysis of GVC Gaesco, raised whether dedicating these investments to pay more cash to shareholders, as do American companies that have not chosen to carry out an energy transition as clear as the European ones, would be a better option.

“That is the only one but that I see from some investors, but not to the concrete results, which I believe are still in line with what we were all expecting and have even improved expectations for the end of the year,” he says Peiro.

Investors’ doubts regarding the dividends paid by RepsolHowever, it comes after the company announced the increase in its cash dividend by 5 percent to 0.63 euros per share after approving a capital reduction of 75 million.

For Peiro, that the dividend increased from 0.60 to 0.63 euros per share “does not change the film much, since the company has a very structured way of paying dividends that also complements the repurchase of shares, so it is not one of the criteria that investors look at the most in the oil company.

This, despite the fact that the dividend yield of Repsol It rivals that of the giants of Spanish banking, a fact that has occurred in part thanks to the rise in oil prices, which boosted the profits of the oil company and which continues its rally moving today around 80 dollars.

“It is a paradox what we are experiencing at the moment. There is a trend in the world that oil has to decrease and yet it has risen sharply,” he says. Peiro, adding that “it would be good for the oil companies if the price stabilized around 65-70 dollars per barrel, there is a level where they make cash and in fact the entire investment program of Repsol is based on 50 dollars per barrel. “.


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