RBC Capital Markets has raised its earnings estimates for Italian oil and gas giant Eni after the company reported second-quarter results, pointing to an expanded share buyback programme as a potential near-term support for the stock.
The bank maintained its Sector Perform rating and EUR 28.00 price target on Eni, but noted that the bigger buyback could give shares a lift. The move comes as Eni continues to navigate a volatile energy market, with oil prices fluctuating and refining margins under pressure.
What Eni's results showed
Eni reported its 2Q26 results earlier this month, beating analyst expectations on earnings and cash flow. The company also announced an increase to its share buyback programme, a move that typically signals confidence in future cash generation and returns value to shareholders.
Share buybacks reduce the number of shares in circulation, which can boost earnings per share and often support the stock price. For investors, a bigger buyback can be a positive signal, especially when combined with solid operational performance.
RBC's updated forecasts reflect higher near-term earnings expectations, though the bank expressed a preference for companies with more exposure to refining — a segment that has been particularly strong recently. This suggests that while Eni is performing well, RBC sees better opportunities elsewhere in the energy sector.
Context: Eni's position in the energy landscape
Eni is one of Europe's largest integrated oil and gas companies, with operations spanning exploration, production, refining, and marketing. Like its peers, it has benefited from higher energy prices in recent years, but also faces challenges from the energy transition and regulatory pressures.
The company has been investing in renewable energy and low-carbon projects, but its core business remains tied to fossil fuels. The buyback increase suggests management is confident in its ability to generate cash from these operations, even as the industry evolves.
RBC's decision to keep a Sector Perform rating — essentially a neutral view — indicates that the bank sees Eni as fairly valued at current levels, with limited upside from here. The EUR 28 target implies a modest potential gain from recent trading levels.
What it means for investors
For everyday investors, the key takeaway is that Eni's bigger buyback could provide a floor for the stock in the short term. Buybacks are a form of returning capital to shareholders, similar to dividends, and can be a sign that a company believes its shares are undervalued.
However, RBC's preference for more refining exposure is worth noting. Refining margins have been strong due to tight supply and high demand for fuels like diesel and gasoline. Companies with larger refining operations, such as some US and Asian players, may benefit more from this trend.
Investors should also consider the broader energy market outlook. Oil prices have been volatile, with geopolitical tensions and OPEC+ production decisions adding uncertainty. A slowdown in global economic growth could weigh on demand, while supply disruptions could push prices higher.
Eni's diversified business model — spanning upstream, downstream, and renewables — offers some protection, but it also means the company is exposed to multiple risks. The buyback is a positive signal, but it doesn't eliminate the underlying uncertainties.
Broader market context
The energy sector has been a mixed bag for investors this year. While oil prices have remained elevated, they have pulled back from 2025 highs, and refining margins have been a bright spot. Companies like Shell have also reported strong results, partly due to trading gains.
Meanwhile, European banks like Societe Generale have posted record profits, and Lloyds has announced its own buyback, showing that the trend of returning cash to shareholders is widespread across sectors.
For Eni, the buyback increase is a vote of confidence from management, but RBC's neutral rating suggests the stock may not have much room to run. Investors should weigh the potential support from the buyback against the broader risks in the energy market.
As always, it's important to consider your own investment goals and risk tolerance. Eni's buyback is a positive development, but it's just one factor in a complex picture.
