Wednesday, November 30

Repsol clears the way to annual highs

The actions of Repsol they chained a streak of four sessions to the rise that took the price to 10.51 euros.

As explained, the oil company has an upward potential of more than 30 percent, a rebound that can be stimulated after the price exceeded the average of the 100 and the last 200 sessions.

Both references, located around 10.43 euros, now act as dynamic support for the titles of Repsol, which has scored 27 percent so far this year. This was the signal that analysts were waiting to confirm the bullish turn of the oil company.

The irruption of the omicron variant brought oil prices down to 70 dollars, although the subsequent recovery to 78 dollars gave margin to the oil companies.

In the case of Repsol, the downward pressure did not go beyond 10 euros, with analysts convinced by the increase in the dividend and the upward revision of the business guides.

Improves fundamental prospects for Repsol in 2022

According to the consensus of analysts at, Repsol will report next year an adjusted EBITDA of 7,263 million euros, which will mean a year-on-year increase of 10 percent.

Looking ahead to 2022, “we continue to be positive in value,” said Luis Padrón, an analyst at Renta 4 Banco. In particular, it will be a good year for the industrial division, thanks to the improvement in the refining margin.

“Repsol breaks up a double bottom that gives us a projection of rise to the maximum of the year at 11.45 euros”

Manuel Pinto, XTB analyst

It will also be the year in which the group decides what to do with its renewable energy division, although the outlook is somewhat more uncertain. The oil company reactivated the sale of a minority stake in the business in early December.

In November last year, in the midst of the pandemic, the company gave a year and a half to finalize the plans for this green subsidiary. It remains to be seen if in the end the oil company will get the 1,000 million it wants for 25 percent.

The problem is that the appetite for renewables was deflated in 2021, as evidenced by the frustrated debut of Opdenery and Capital Energy.

Far from calming the waters, the tidal wave in the bag with these energies it still persists, as explained by Social Investor. In fact, the listed renewable energy companies have lost almost 32,000 million of capitalization since the highs in January, a whole stock market desert.

The dividend as the driving force behind the increases at Repsol

However, one of Repsol’s driving forces in the final stretch of the year was the increase in the dividend. Including buybacks, Deutsche Bank analysts calculated a dividend yield of 7.8 percent, well above the 4.8 percent for the industry.

“The generation of free cash, together with the dividend yield and the potential for revaluation, means that we continue to bet on the company,” said Padrón.

In fact, Repsol’s dividend yield, which reaches 5.6 percent excluding buybacks, allows the group led by Josu Jon Imaz to rub shoulders with the giants of Spanish banking in shareholder remuneration.

For Bankinter analysts, this dividend is sustainable due to the increase in oil and the control of debt.

In addition, as Padrón pointed out, the company will be able to generate double-digit cash flow, since capital investments will be more normalized in 2022. They are catalysts that support dividend profitability.

Bullish return for Repsol

From a technical point of view, the breakout of the 200-session average that just occurred shapes a bullish turnaround pattern, said the head of analytics at the firm. INVESTMENT magazine, Josep Codina.

Specifically, “a double bottom is breaking upwards that gives us a projection of rise to the maximum of the year at 11.45 euros”, agreed Manuel Pinto, an analyst at XTB.

The important thing in Pinto’s opinion is that Repsol has broken the downward dynamics that the stock had brought since October, which is linked to the recovery in oil prices.

In addition, the advance of the share buyback “is a signal that the market understood as positive due to the confidence in the management of the company,” added Pinto.