IBERIAN DAILY 20 FEBRUARY + 4Q’24 RESULTS. HIGHLIGHTS AND REST OF PREVIEWS (ANÁLISIS BANCO SABADELL)
NEWS SUMMARY: ACS, IBERDROLA, REPSOL, ROVI.At the end of today’s report, and during the entire results season, we will include a presentation with positive and negative results highlights and previews for the 4Q’24 results to be released over the coming days in Spain.
Stock markets take a break from highs
European stock markets slid >-1% after new tariff threats by D. Trump whereas the US made progress and managed to close the 2025 gap. In the STOXX 600, defensive sectors such as Utilities and Household were the best performers whereas Construction and Basic Resources posted the biggest drops. On the macro side, in the UK, January’s inflation climbed to 3.0% YoY (above expectations), whereas the core data speeded up to 2.7% (in line). In the euro zone, diplomats will include the prohibition of Russian aluminium imports in the new sanction package against the country. From the ECB, I. Schnabel left the door open to halt rate cuts in March’s meeting. In the US building permits rose unexpectedly whereas housing starts dropped more than expected in January. From the Fed, January’s meeting minutes admitted significant uncertainty about inflation, suggesting new progress in the convergence process to cut rates. In China, the PBoC, as expected, kept the 1 and 5Y benchmark loan rates unchanged at 3.1% and 3.6%, respectively. On the geopolitical front, D. Trump called Zelenski a dictator, warning he intends to reach an agreement with China whereby the country would pledge to carry out higher investments and purchase of US products. In US business results Devon Energy, Occidental Petroleum, Analog Devices and Garmin beat expectations whereas Trimble was in line. On another note, Microsoft announced progress in quantum computing and warned it will arrive in a few years’ time and not in decades.
What we expect for today
European stock markets would open with slight gains amid significant uncertainty but with relatively low volatility. Currently, S&P futures are down -0.40% (the S&P 500 ended +0.18% higher vs. the European closing bell). Asian markets are sliding (China’s CSI 300 -0.21% and Japan’s Nikkei -1.35%).
Today in Mexico we will learn December’s retail sales, in the US weekly jobless claims and February’s Philadelphia Fed index. In US business results, Walmart, Hasbro, The Southern and Booking, among others, will release its earnings.
COMPANY NEWS
ROVI. A more conservative scenario for CDMO. OVERWEIGHT
Following its recent profit warning, we cut our EBITDA’24-26e estimates by -26% to reflect a more conservative scenario in CDMO (sales -17% in 2024e and -16% and 2025e) and lower peak sales of Risperidone ISM (€ ~101 M vs. 100/200 M guidance) due to its decision of not marketing Risvan in the US. We cut our T.P. by -20% to € 72.00/sh. (+31% upside), reiterating our OVERWEIGHT recommendation following the strong correction (-13% in 2025; -24% vs. IBEX), which in our views is pricing in an overly negative scenario (valuing CDMO at 7.4x EV/EBITDA). Its CMD (March) will be key and we believe that the company should unveil a solid and convincing roadmap to restore the confidence.
REPSOL, OVERWEIGHT
The 4Q’24 results beat expectations. 4Q’24 adjusted Net Profit came in at € 643 M (-46.2% vs. 4Q’23, vs. -50% consensus and BS(e)), meaning Net Profit’24 of € 3.33 Bn (-33.6% vs. 2023, vs. -35.5% BS(e) and -37.5% consensus). NFD reached € 5.01 Bn. The company reiterated the DPS’25 of € 0.975/sh. forecast (+8.4% vs. 2024; 8% yield) and announced share buybacks of at least € 700 M (~60 million shares; ~5% of capital), meaning 30-35% of FCO. REP announced a 2025 guidance in line with the Strategic Plan: Brent at US$ 75/barrel (vs. US$ 70 BS(e)); Henry Hub at US$ 3/MBtu; refining margin US$ 6/barrel (vs. US$ 5 BS(e)). On the operating level: production of 530-550 Mbep/day; operating FCF of € 6.0-6.5 Bn; net investments € 3.5-4.0 Bn (€ 2 Bn of investments and portfolio rotation).
We expect a positive reaction to these results and the announcement of share buybacks. There will be a conference call at 12:00 (CET).
4Q’24 Results highlights and rest of previews
Of the stocks releasing their earnings over the coming days, on the positive side we highlight Ferrovial (releasing on 27/02), where we expect to continue seeing strong performance in Highways, which could beat expectations on both the traffic level and in tariffs. This, along with the potential announcement of an increase to shareholder remuneration, could drive the share price after the lacklustre performance on the year (+6% in absolute terms; -6% vs. IBEX).
ACS Actividades de Construccion y Servicios is a holding company. Through its subsidiaries, Co.'s activities are divided into the following areas: Construction, engaged in the construction of civil works, and residential and non-residential building construction; industrial services, engaged in the development of applied engineering services, installations and the maintenance of industrial infrastructures in the energy, communications and control systems sectors; services, groups together environmental services, the outsourcing of building maintenance services, logistics and transport services; and concessions, mainly engaged in transport infrastructure concessions.
Iberdrola is a holding company. Through its subsidiaries, Co. operates in four segments: network business, which includes all the energy transmission and distribution activities, and other regulated activity originated in Spain, the U.K., the U.S. and Brazil; deregulated business, which includes electricity generation and sales businesses as well as gas trading and storage businesses carried on by Co. in Spain, Portugal, the U.K. and North America; renewable business, with activities related to renewable energies in Spain, the U.K., the U.S. and the rest of the world; and other businesses, including the engineering and construction businesses and the non-power businesses.
Laboratorios Farmaceuticos Rovi is engaged in the sale of its own pharmaceutical products and the distribution of other products for which it holds licenses granted by other laboratories for specific periods, in accordance with the terms and conditions contained in the agreements entered into with said laboratories.
Repsol is an oil and gas company. Co. is engaged in all the activities relating to the oil and gas industry, including exploration, development and production of crude oil and natural gas, transportation of oil products, liquefied petroleum gas (LPG) and natural gas, refining, the production of a wide range of oil products and the retailing of oil products, oil derivatives, petrochemicals, LPG and natural gas, as well as the generation, transportation, distribution and supply of electricity. Co. operates in more than 40 countries. Co.'s operations are divided into four segments: Upstream, Downstream, LNG and Gas Natural Fenosa.
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