Energy Mid-Majors Back to the Defence Playbook

Morgan Stanley shifts its preference within European energy mid-majors to defensive names, upgrading Galp Energia to Overweight while downgrading Repsol to Equal-weight. This adjustment reflects updated lower oil price forecasts of $70/bbl for 2027.

Key Takeaways

• 1.Incorporated lower commodity price assumptions, leading to 5-10% earnings downgrades and ~10% price target cuts for Galp and Repsol.
• 2.Upgraded Galp Energia to Overweight citing high-quality defensive assets and potential near-term catalysts (Moeve merger, Namibia/Rovuma FIDs).
• 3.Downgraded Repsol to Equal-weight and resumed OMV coverage at Equal-weight due to valuation concerns and lack of immediate catalysts relative to Galp.

Table of Contents

• Key Takeaways
• Back to the Defence Playbook
• Anchoring oil prices at $70/bbl again
• Galp's defensive features become more prominent again
• while we see a mixed combination of factors for Repsol
• Resuming coverage of OMV at Equal-weight
• Financial Summaries
• Risk Reward – Galp Energia (GALP.LS)
• Risk Reward – Repsol (REP.MC)
• Risk Reward – OMV AG (OMVV.VI)
• Risk Reward Reference links
• Disclosure Section
• Analyst Certification
• Global Research Conflict Management Policy
• Important Regulatory Disclosures on Subject Companies
• STOCK RATINGS
• Global Stock Ratings Distribution

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