Investing.com -- RBC Capital Markets downgraded OMV AG to “underperform” from “sector perform” on Thursday, citing near-term earnings pressure across chemicals, European gas and refining, despite what it described as improvements to the company’s longer-term investment case.
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The brokerage cut its price target on OMV shares to €46 from €50. OMV shares were trading at €49.74 at the time of the report.
The downgrade follows a strong rally in OMV shares through 2025, which RBC said has left the stock “looking extended,” even as several operating segments face headwinds.
RBC said chemicals, where OMV has a relative overweight compared with peers, remain in an extended downcycle, with recent trading updates indicating margins are likely to stay depressed through 2026 due to global overcapacity.
OMV has also flagged that stronger sales volumes were offset by lower polyolefin indicator margins and reduced cracker utilization, partly in response to weak market conditions.
RBC said the near-term upside from the Borouge Group International, or BGI, transaction is limited.
While the transaction is expected to raise OMV’s chemicals earnings over time, RBC noted that OMV’s policy caps its payout from the BGI dividend at 50%, with the dividend itself expected to remain at its floor level over the next two to three years. As a result, RBC said shareholder returns remain undifferentiated in the near term.
The brokerage also highlighted OMV’s exposure to European gas. RBC said OMV is among the most exposed companies to European gas prices in its coverage universe, behind only Equinor.
RBC said a weaker outlook for European gas prices could weigh on earnings at a time when OMV is increasing its focus on gas, which management has described as a “significant” opportunity.
Refining margins were another factor behind the downgrade. RBC said refining margins are expected to normalize in 2026, reducing earnings contribution from the segment.
The analysts noted that OMV’s cash flow from operations is particularly sensitive to changes in refining margins, ranking behind only Repsol and Galp among integrated peers for the impact of a $1 change in margins.
RBC said it updated its forecasts following OMV’s fourth-quarter trading update and revised commodity price assumptions.
The changes lowered RBC’s 2026 net income estimate for OMV by 15%, leaving it 11% below consensus. RBC’s updated estimates assume Brent crude at $60 per barrel and TTF gas at $8.8, alongside lower refining margin assumptions.
Based on these revisions, RBC said OMV trades at 6.2x EV/DACF for 2026, compared with 5.8x for European integrated peers, and offers a 5.7% free cash flow yield, versus 5.9% for peers.
