Vallourec reported a strong 1Q26 beat with a narrowing profitability gap vs Tenaris and maintains its Buy rating with an increased €28.80 price target. Despite near-term logistical headwinds in the Middle East, the company sees strong 2H26 and 2027 outlooks driven by offshore activity and US pricing.
Key Takeaways
- 1.Vallourec beat 1Q26 EBITDA expectations, reporting €187 mn vs €178 mn consensus, driven by shrinking unit profitability gap vs peer Tenaris.
- 2.The company is successfully narrowing the profitability gap with Tenaris, with Tubes EBITDA/t at $724, only $20/t below Tenaris in the quarter.
- 3.2Q26 is expected to be the earnings trough due to Middle East logistical disruptions, with recovery projected in 2H26 supported by US pricing and international demand.
Table of Contents
- 1Q26 takeaways
- Results
- Guidance
- 2026 outlook: 2H26 support from US pricing, 2027 outlook upbeat on offshore projects momentum
- International ex-Middle East
- US market: pricing-led recovery in 2H26
- Oil & Gas capex revival positive for longer-term OCTG demand
- Estimate changes, valuation and risks
- Oil services valuation sheet
- Disclosure Appendix
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Authors
Michele Della Vigna, CFAYulia BocharnikovaAnastasia Shalaeva
Securities
VK.PATEN.MIFervo Energy
Themes
Narrowing Profitability GapStructural Cost FlexibilityGlobal Energy Capex UpcycleGeothermal Diversification
Regions
GlobalEuropeMiddle EastFranceUnited StatesSaudi Arabia