Citi The Point for Europe Monday,

The Point for Europe Monday, 17 August 2026

Top Call | Company | Industry | Strategy & Economics | Key Rating and Target Price Changes

Top Call Must Read European Economics - Eurozone : Steady as She Goes Despite large oscillations in sentiment data, underlying growth in the Eurozone Global Economic Outlook & Strategy - has been remarkably stable, albeit not stellar, over the past three years, especially Renewed Uncertainties—But Continued Resilience given the numerous exogenous shocks. 2Q GDP release this morning confirmed this picture. The labour market is softening, as cyclical productivity is picking up. Giada Giani

Global Integrated Oil & Gas - Essential Energy - Apathy, Inventories and Export Bans Citi's Global Energy Conference in Las Vegas last week comes a little over five months into the Gulf energy crisis, a period in which energy equities have performed okay although that peak performance came largely in the first month (i.e. to end-March). Our top three conference themes: (1) We detect continued investor apathy towards putting new money to work in the sector given the constant headline risks around either crisis de-escalation or escalation, (2) There is debate about oil inventories: two opposing views are emerging, and (3) Rightly or wrongly, there is some conversation around a US oil product export ban. Alastair R Syme

Company Rolls Royce (RR.L) - Updating forecasts and Target price to 1,647p We are materially upgrading our long-term profit and cash flow forecasts by 30- 40% and raising our Target Price to 1,647p from 1,101p following very strong H1 results. However, recent share price appreciation leaves insufficient upside to upgrade to Buy, and we maintain our Neutral rating. The forecast changes are driven by improvements across all divisions, but most significantly in Power Systems. While we also increase Civil Aerospace forecasts, we believe the record H1 Defence margins are not sustainable. Our sensitivity analysis indicates Power Systems is now the most influential driver of value, surpassing Civil Aerospace. Charles J Armitage

E.ON (EONGn.DE) - What is read-across from German gas RP4 proposal E.ON shares have reacted negatively to draft gas remuneration determination published by BNETZ today. The draft determination contains two items: 1) Post- _ tax cost of equity was proposed at 4.90% (=1.85% risk-free rate + 4.95% MRP x _

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0.62 levered beta) vs. 4.13% in RP4 and 2) Cost of debt for existing assets was proposed at 2.43%. The direct impact on E.ON should be rather small as gas assets currently make only 12% of German RAB and given accelerated depreciation and high power capex it will decline to c. 6% in 2030. However the market seems to be making a read across to possible power asset remuneration, which we think could be exaggerated and does not yet determine negative outcome. Piotr Dzieciolowski

BMW (BMWG.DE) - CMD thoughts 1 - The trouble with "strategy". On the Q2 26 call, BMW suggested its September CMD would highlight cost reductions and a "new way of working with suppliers", which should improve profitability. Given very low 2H 26/FY26 EBIT margins, we fully expect BMW will set medium term EBIT margin / FCF targets well above current levels - although structural changes (China, tariffs) suggest these may be (400bps) lower than previous "normal" BMW levels. Whether these will be achieved remains to be seen. However, BMW also highlighted that it believed its core industrial "strategy" was correct and would not be changed. Whilst we have some sympathy for this "auto" view, we would argue the industry environment has changed, and the "financial" (allocation) strategy has not worked for shareholders. Should BMW's strategy not evolve to reflect this? Harald C Hendrikse | Ross MacDonald | Soumava Banerjee

Universal Music Group (UMG.AS) - Resuming Coverage with Buy Rating and €20 Price Target We have renewed our rating on UMG after a period of Rating Suspended with a Buy rating and a target price of €20. We continue to like UMG for three reasons: 1) Continued upside from higher minimum per sub (MSP) payments…