-- BofA Global Research affirmed its investment case for Galp Energia (GALP.LS), noting the Portuguese energy company's production growth "begins to bear fruit" in Brazil alongside long-term potential seen in Namibia.
"Galp's 1Q26 results showcased its first signs of growth, beating on EBITDA by 6%. We expect Bacalhau's continued ramp-up in Brazil to drive FY26e production up 17% Y/Y and c.30% by FY27e (vs FY25). We see discoveries in Namibia as Galp's key point of difference; we estimate these underscore a company reserve life of c.20yrs, which betters most European Integrated Oils. Namibia could represent towards ~100 [thousand barrels per day] net production to Galp by the early 2030s versus <130kb/d total group production today. We reiterate our Buy rating; our EUR23 [price objective] is unchanged. Galp is on our 'What's big in SMID' list of top ideas. We see c.$60/bbl long-term Brent priced into Galp's current equity value," analysts said Tuesday.
Within this context, the research firm trimmed its 2026 and 2028 EPS projections, alongside a 1% cut to its 2026 EBITDA estimate amid lower profitability in industrials and midstream. On the other hand, analysts raised their production forecast by 2% to 130kb/d, aligning with the top range of management's target of 125kb/d to 130kb/d.
BofA also continues to expect a 10% free cash flow yield for the year at $93 per barrel Brent price, which analysts believe Galp can sustain through 2028, even at the $75/bbl Brent forecast.