Equinor, Norway's state-backed energy giant, got a modest boost to its profit outlook this week as analysts at AlphaValue/Baader Europe raised their earnings estimates for 2026 and 2027. The reason: European natural gas prices are expected to stay stronger for longer, which should help offset a projected decline in oil prices.
In a note published Thursday, the research firm updated its commodity price assumptions. It now sees Brent crude averaging $95 a barrel in 2026, falling to $80 in 2027 and $67 in 2028. Meanwhile, European gas is expected to average €58 per megawatt-hour in 2026, rise to €63 in 2027, and then drop to €45 in 2028.
That gas curve is key. Because gas prices are now expected to be higher in 2027 than in 2026, Equinor's operating profit in 2027 could stay close to 2026 levels, even as the assumed oil price falls. That's a meaningful shift from earlier forecasts, which likely had gas declining more steeply.
What the numbers show
As a result, the analysts raised their adjusted earnings per share (EPS) estimates for Equinor. For 2026, they now expect $6.34, up from $5.74. For 2027, they see $5.78, up from $5.15. These are the earnings figures that strip out one-off items and are often used to value companies.
But there's a catch: taxes. The firm also raised its effective tax rate assumption for Equinor, now expecting 70% in 2027, up from 68% in 2026. That's because a larger share of Equinor's profit is expected to come from Norway, where upstream oil and gas earnings face a hefty 78% tax rate. Norway's petroleum tax regime is among the highest in the world, designed to capture a large share of resource rents for the state.
Even after the upgrades, AlphaValue/Baader Europe kept its reduce rating on the stock and its price target of 407 Norwegian kroner. That's a signal that the higher earnings are seen as catching up to already-high commodity prices, not as a reason to pay more for the shares.
Why the target didn't move
For investors, the most interesting part of this note is what the unchanged price target means. When expected profits rise but the target price stays flat, the implied price-to-earnings (P/E) ratio in the model falls. In plain terms, the analyst is willing to pay a lower multiple for the same company.
That's why notes like this often lead to a muted share-price reaction. The market tends to view them as a mechanical adjustment to commodity assumptions rather than a fundamental re-rating. In other words, the earnings boost is already priced in.
Equinor is one of Europe's largest energy producers, with a heavy focus on natural gas, which it exports to the continent. Its fortunes are closely tied to both oil and gas prices, and its shares often move with those markets. The company also pays a substantial dividend, making it a favorite among income-focused investors.
This update comes as European stocks have been under pressure, with luxury stocks dragging the broader market after Kering's Gucci stumble. Energy stocks, however, have been relatively resilient, supported by firm gas prices.
What it means for investors
For everyday investors, this note is a reminder that energy company earnings are highly sensitive to commodity price assumptions. A small change in the expected path of gas or oil prices can swing profit forecasts by a wide margin.
It also highlights the importance of taxes in the energy sector, especially in Norway. Even if Equinor earns more, a larger share of that profit may go to the state, limiting what flows to shareholders.
Investors should watch how actual gas prices evolve over the coming months. If European gas stays elevated due to supply concerns or cold winters, Equinor could beat these already-raised estimates. Conversely, if gas prices fall faster than expected, the earnings outlook could quickly sour.
For now, the analyst's message is clear: Equinor's earnings are getting a lift from gas, but the stock still isn't cheap enough to upgrade. That's a cautious stance, and one that suggests investors should weigh the potential for higher profits against the risk of a lower valuation multiple.
