Morgan Stanley upgraded Neste to "overweight" from "equal-weight," boosting its price target to €25 from €18.80. The brokerage cites higher-than-expected renewable margins and balance sheet flexibility as key drivers, assuming margins of about $650 per tonne for most of fiscal 2026.
This assumption represents a 20% increase versus consensus, implying roughly 17% upside to renewable products EBITDA. The upgrade is supported by policy-driven demand in Europe and a potential recovery in U.S. renewable diesel margins, particularly if the EPA's 2026 renewable volume obligations lift RIN prices.
Morgan Stanley also highlighted Neste's term sales strategy, which historically covers 60-80% of volumes and could anchor 2026 output at favorable margins. The bank noted the market hasn't fully priced in the company's balance sheet position post-Rotterdam expansion, with leverage expected to decline as cash flow improves.
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