Tuesday, February 27

Repsol leaves the worst behind and points to pre-pandemic highs

Repsol’s shares managed to maintain the level of 11 euros at the start of the year that translated for the oil company into increases of 7 percent. With this bullish momentum, the attack on pre-pandemic levels is just around the corner.

When the pandemic broke out in March 2020, Repsol It was trading around 12.7 euros, which is exactly the target price discounted by the consensus of finance.com analysts. Until this zone there is a potential rise of almost 14 percent.

Much of this rise was driven by the lightning recovery of Brent oil, which has risen more than 22 percent from its December low and is trading at $85 a barrel.

The oil company had a hard time at the end of November, when the emergence of the omicron variant caused a tremor in the market that sent its titles to 9.88 euros. From these levels, the recovery has been both vertical and forceful.

Repsol leaves the worst behind

It is true that some bearish investors have increased the pressure on Repsol, but the feeling among analysts is that the storm is history.

“The high prices of hydrocarbons, the recovery of the demand for fuels and the refining margin suggest that the worst may be over for Repsol”, Bloomberg Intelligence analysts told finance.com.

Travel restrictions and closures affected the refining margin in the first half of last year, but “the subsequent expansion and cost controls of the company should help the generation of EBITDA for the full year”, these experts pointed out.

In addition to the rise in oil and the best business projections, the attractive dividend discounted Repsol is another factor that the market is taking into account.

The company has an estimated dividend yield in 2022 of 5.6 percent, according to the consensus of finance.com experts.

This percentage is only lower in the European sector of Galp (7.11 percent) and Eni (6.1 percent), but outperforms giants like BP (5.13 percent) or Royal Dutch Shell (4.2 percent).

Oil at eight-year high

With everything, Repsol was forced to cut its dividend by 40 percent in the year of the pandemic, a decision that “made sense” after the fall in oil prices, they explained in Bloomberg Intelligence.

But with the recovery of crude oil and the generation of cash, the increase in the dividend was the natural step, along with the repurchase of shares.

Without going any further, Renta 4 Banco expects that this year Repsol generate double-digit cash flow and calculate a dividend yield of 6 percent.

The recovery of oil is one of the great catalysts that sustain market projections. This Monday, the barrel of Brent Crude It was trading above $85 and hitting 2014 highs.

The lesser severity of the omicron variant of coronavirus and the decision of the OPEC to increase supply by 400,000 barrels, which was expected, gave wings to crude oil.

“There is a belief that demand will continue to outstrip supply,” he said. Tamas Varga, analyst for broker PVM Oil Associates.

Repsol, in search of the 12 euros

Although the Repsol price is taking a breather this Monday, the 12.7 euros predicted by the consensus of fundamental analysts mean leaving behind the levels prior to the pandemic.

Before, the oil company will have to overcome the resistance of 11.35 euros in the very short term and later Josep Codina marks a resistance of 11.488 euros in his daily technical analysis on Repsol.

If the upward trend continues and the oil company can overcome these obstacles, the experts consulted no longer see many obstacles to attacking the area of ​​rounded numbers at 12 euros.