Trump says Iran war "close to over" amid hopes for more negotiations
Investing.com -- UBS upgraded Polish energy company Orlen SA to “neutral” from “sell’ on Friday, raising its 12-month price target to PLN120 from PLN100, citing higher oil and gas prices and stronger refining margins driven by Middle East disruptions.
Orlen shares traded at PLN133.20 on March 19, putting the stock roughly 10% above the new price target.
UBS raised its 2026 European gas price forecast by roughly 40% and its 2027 estimate by roughly 10%, lifted Brent crude projections to $86 per barrel for 2026, up 19%, and to $80 per barrel for 2027, up 14%.
The brokerage also doubled its 2026 European composite refining margin estimate to $14.8 per barrel and raised its 2027 estimate to $6.0 per barrel, up 33%, according to the UBS research note.
"Amid increased sensitivity to gas prices after merger with PGNiG and no upstream assets exposure to the Middle East, Orlen benefits from higher gas prices," UBS analysts said.
The earnings revision was substantial. UBS increased its 2026 earnings per share estimate by 30% to PLN16.04 and its 2027 estimate by 13% to PLN11.39.
Group EBITDA for 2026 was revised up 24% to PLN49.59 billion versus consensus of PLN38.99 billion, placing UBS 27% above the street for that year.
The brokerage attributed the macro shift to ongoing Middle East conflict that has affected major oil, gas and refining infrastructure.
UBS estimated roughly 3.5 million barrels per day of refining capacity has been affected in the region, while damage to Qatari LNG facilities was described in the note as "extensive."
The brokerage forecast TTF gas at $22.6 per mmBtu in 2026, falling to $13.5 in 2027 and $8 in 2028 when new LNG supply comes online.
UBS forecast positive free cash flow for Orlen in 2026 but returned to negative territory from 2027 onward, with operating cash flow of PLN42.84 billion against capex of PLN36 billion in 2026.
On dividends, UBS lifted its FY26 DPS estimate to PLN7.38, implying a 5.5% yield at the current share price. The brokerage cited Orlen’s strong balance sheet, with net debt-to-EBITDA at 0.3x for both 2025 and 2026.
The upgrade carried an upside/downside spectrum ranging from PLN165 in a bull case, assuming $10 per barrel refining margins in 2027 and upstream production of 230 kboe/d, to PLN85 in a bear case based on $3 per barrel margins and 180 kboe/d production.
UBS flagged government intervention risk as a key downside, noting that protected gas tariff customers were unlikely to feel higher prices until mid-2027.
The brokerage also flagged petrochemicals and fertiliser margin pressure, higher crude logistics costs from April following potential reductions under Orlen’s long-term contract with Aramco, and possible demand destruction in refined products, particularly jet fuel, at current price levels.