RBC Capital Markets downgraded OMV AG to "underperform" from "sector perform" on Thursday, citing a collection of near-term pressures across the company’s chemicals, European gas and refining businesses despite what it described as longer-term improvements to the investment case.
Alongside the rating change, RBC reduced its price target on OMV to €46 from €50. The report indicated OMV shares were trading at €49.74 at the time of publication.
Chemicals headwinds
RBC pointed to an extended downcycle in chemicals, a segment where OMV has a relative overweight compared with peers. The brokerage said recent trading updates suggest margins in chemicals are likely to remain depressed through 2026 as a result of global overcapacity.
OMV itself has noted that higher sales volumes in its chemicals operations have been counterbalanced by lower polyolefin indicator margins and reduced cracker utilization, the latter partly attributable to weak market conditions. RBC characterized these dynamics as a constraint on near-term earnings upside from the chemicals franchise.
Limited near-term benefit from BGI transaction
RBC assessed the planned transaction involving the Borouge Group International, or BGI, as offering limited immediate value to shareholders. While the deal is expected to increase OMV’s chemicals earnings over time, RBC highlighted OMV’s policy that caps the company’s payout of the BGI dividend at 50%.
Moreover, RBC said the dividend from BGI is expected to remain at its floor level over the next two to three years. Taken together, these factors mean the brokerage views shareholder returns tied to the BGI transaction as undifferentiated in the near term.
European gas exposure
Another key concern for RBC is OMV’s exposure to European gas prices. The report placed OMV among the most exposed companies to European gas prices in RBC’s coverage universe, behind only Equinor. The broker noted that a weaker outlook for European gas prices could weigh on OMV’s earnings just as the company is placing greater strategic emphasis on gas, which management has described as a "significant" opportunity.
Refining margins and cash-flow sensitivity
RBC also pointed to refining margins as a headwind, expecting margins to normalize in 2026 and thereby reducing that segment’s contribution to OMV’s earnings. The analysts said 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.
Forecast revisions and valuation
Following OMV’s fourth-quarter trading update and a revision to commodity price assumptions, RBC updated its forecasts. The changes lowered RBC’s 2026 net income estimate for OMV by 15%, leaving that estimate 11% below consensus.
RBC’s updated commodity assumptions include Brent crude at $60 per barrel and TTF gas at $8.8, along with lower refining margin assumptions. On the basis of these revisions, the brokerage said OMV is trading at 6.2x EV/DACF for 2026, versus 5.8x for European integrated peers, and offers a 5.7% free cash flow yield compared with 5.9% for peers.
Takeaway
RBC’s downgrade reflects a view that recent share-price strength through 2025 has left OMV looking extended while a combination of chemicals weakness, constrained near-term upside from the BGI transaction, exposure to European gas-price swings and an expected normalization in refining margins will pressure earnings in the near term. The broker’s revised forecasts and valuation metrics underpin a more cautious stance on the stock.