Translation: Original published in Finnish on 7/9/2026 at 8:30 pm EEST.

Neste will publish its Q2'26 results on Friday, July 24, at around 9:00 am EEST. The market situation in the company's main markets has been quite favorable, which is reflected in our margin-driven upward revisions to forecasts in both key businesses, especially for the short term. Reflecting the upgraded estimates, we raise our target price to EUR 34.0 (from EUR 33.0) and reiterate our Accumulate recommendation for the stock, which we believe is attractively priced.

Margins have remained high and even increased

Due to the ongoing Middle East conflict and the tightening fuel supply/demand situation, diesel prices remained high in Q2, although they have decreased from the elevated levels seen at the beginning of the quarter. Reflecting this and the lower oil price, the refining margin for fossil fuels, especially diesel, has recently been exceptionally high and has recently started to rise again. In addition to the Middle East conflict, we estimate that Ukrainian attacks have reduced Russia's refining capacity, further tightening the fuel market. The price of fossil diesel is reflected in the price of renewable diesel. In addition, renewable diesel, especially for road transport, has benefited from supply constraints in Europe. Reflecting this, renewable diesel reference margins have recently been well over USD 1000/ton, which is an exceptionally high level.

Significant increase in Q2 earnings expectations

We have raised our short-term forecasts and expect Neste to achieve a comparable EBITDA of 1,161 MEUR in Q2 (was 909 MEUR). Thus, we expect the comparable EBITDA to more than triple from the subdued comparison period, which was characterized by a market situation completely opposite to the current strong market. The earnings improvement is driven by both main segments, Oil Products and Renewable Products, supported by their significant refining and sales margins.

Neste has guided that it expects sales volumes for Renewables to be approximately at the same level in 2026 and sales volumes for Oil Products to be lower than in 2025. We believe this guidance will remain unchanged, as it is difficult to extract more volumes from Renewable Products, and the major maintenance turnaround in Porvoo at the end of the year will specifically reduce sales volumes of Oil Products. Instead of volumes, the main focus of the results will be on the margin outlook, which is subject to considerably more uncertainty in a volatile market.

We also raised our longer-term estimates

In connection with this report, we have also raised our longer-term estimates. Our H2'26 estimates were raised due to sustained high margins. Additionally, we have incorporated assumptions of a tighter market situation and thus a higher sales margin in Renewables into our medium-term forecasts. Our current year forecasts for comparable EBITDA increased significantly (17%), while forecast changes for the coming years were in the 3-5% range.

Risk/reward is attractive

Following the upward revision of our estimates, the stock's 2026-2027 valuation multiples (P/E ratio of 11-15x and EV/EBIT multiple of 10-13x) are, on the whole, quite neutral. With the earnings growth of renewable products, the segment is valued at less than 9x EV/EBIT for 2028 based on our sum-of-parts calculation. In our view, this is an attractive level, and the potential for valuation upside in the medium term offers an attractive expected return.