EUR 100.00 For Business Accounts Only

IBERIAN DAILY 11 MARCH (ANÁLISIS BANCO SABADELL)

NEWS SUMMARY: INDITEX, MELIÁ HOTELS, MERLIN PROPERTIES, REPSOL.

Markets take a breather
European markets rallied after expectations of the duration of the war in Iran improved. In this regard, Trump admitted in an interview with Fox that he could talk with Iran, while Israel, through its Foreign Minister, G. Saar, confirmed that it is not seeking a drawn-out conflict. In the STOXX 600, leading the rally were Basic Materials and Banks, while defensive sectors like Food and Pharma ended with the smallest gains. On the macro side, in the US SME confidence (NFIB index) for February worsened unexpectedly, and February’s second-hand home sales rose more than expected. According to the press (FT), JPMorgan lowered the value of some loans awarded to private credit groups. On another note, the Energy Ministers of the G7 did not reach an agreement on the use of oil reserves and but the IEA would propose to free reserves above the 182 M barrels freed due to the Ukrainian conflict whereas calculations suggest that its members would have the equivalent to more than 1.2 Trillion barrels reserved. In US business results, Oracle beat earnings and sales expectations and raised its guidance.
What we expect for today
European stock markets would open with slight drops. Currently, S&P futures are up +0.17% (the S&P 500 ended -0.44% lower vs. the European closing bell). Asian markets are rising (China’s CSI 300 +0.68%, Japan’s Nikkei +1.53% and South Korea’s Kospi +1.54%).
Today in the euro zone we will learn February’s final inflation, in Spain January’s retail sales, in the US February’s inflation and in Brazil January’s retail sales.



COMPANY NEWS

INDITEX. Better 4Q’25 results in sales (and costs) and a solid start to 1Q’26. We raise our T.P. to € 59.00/sh. OVERWEIGHT
The 4Q’25 results beat expectations thanks to +9.0% growth in LfL sales (vs. +8.8% expected), solid gross margin performance (+84bps to 54.8% vs. +34bps consensus) and control over the rest of the costs (EBIT +9.2% BS(e) vs. +7.6% consensus). The indications on 1Q’26 are positive (01 Feb-08 March), with +9% LfL growth (in line with expectations). The company announced targets’26 of a stable gross margin (in line with our estimate and the consensus), -1% FX effect and € 2.3 Bn of investments (vs. € 1.8 Bn ordinary in 2024-25 and vs. € 2.7 Bn consensus). ITX has proposed a DPS’25 of € 1.75/sh. (+4% vs. 2024; minimum € 1.76/sh. expected; 3.3% yield). We adjust our estimates following these solid results, trading update and investments announcement, and we raise our T.P. to € 59.00/sh. (+11% vs. previous and more than +12% upside). We expect a positive reception (the stock has fallen around -7% in 2026, +1% vs. sector and around -8% vs. IBEX 35).

MERLIN PROPERTIES. Capital Markets Day on Data Centres (DC). OVERWEIGHT.
The company unveiled further details on the phase III and the additional pipeline of the DC business: 412MW through 2031, € 4.47 Bn of investments and 14.7%.yield on cost. Thus, in 2032, data centres would account for around 65% of rents (vs. 6% in 2025 and vs. 0% in 2024). Additionally, there are several appealing projects (not included in Phase III). The group will resort to the debt and equity market in phases in a 50/50 proportion. The equity needs could reach € 2.24 Bn (27% of its market cap), with a first capital increase already in 2026. MRL is developing greenfield assets worth € ~10-11 M per MW with a value of around € 19 M once completed and leased, and thus, we believe that the plan is highly positive.

REPSOL. After the CMD’26-28 we raise our T.P. OVERWEIGHT
REP reiterated its commitment with the plan’s strategic pillars and good flexibility to adapt capex, ensuring strong visibility on the shareholder remuneration target. REP showed capacity to achieve higher normalised refining margins (with an improved breakeven point), while it continues to optimize the Upstream portfolio and leverage the solid commercial momentum. Following the CMD, we raise our estimate in recurring refining margin (to US$~6/barrel vs. the previous US$ 5 and US$ 7 in 2026e) and production (600 kboe/d after 2028 vs. 580 kboe/d previously), and we slightly improve our forecast for Henry Hub and the commercial and chemical business. Our new T.P. rises to € 23.19/sh. (+25% vs. the previous) and maintain our OVERWEIGHT recommendation due to upside (+11%) and shareholder remuneration (around 9% in cash and buybacks). Moreover, Venezuela, the liquidity event (where there is no hurry) and Iran would add positive additional options.