JP Morgan Downgrades Equinor to Underweight, Affects EQNR Stock Performance

JP Morgan analyst Matthew Lofting downgraded Equinor (EQNR) from 'Neutral' to 'Underweight', citing a shift in the analyst's perspective on the company's stock performance. Equinor is a Norway-based integrated oil and gas company with a 67% government stake. The average target price for Equinor is $24.11, with a high estimate of $28.00 and a low estimate of $20.65, implying a 0.69% downside from the current price. The average brokerage recommendation is 2.8, indicating a "Hold" status.

JPMorgan analyst Matthew Lofting has downgraded Equinor (EQNR) from 'Neutral' to 'Underweight', signaling a shift in the analyst's perspective on the company's stock performance. This move comes amidst broader market trends and specific concerns about Equinor's financial health and strategic positioning.

Equinor, a Norway-based integrated oil and gas company with a 67% government stake, has seen its stock price react to the downgrade. The average target price for Equinor currently stands at $24.11, with estimates ranging from a high of $28.00 to a low of $20.65, implying a potential 0.69% downside from the current price. The average brokerage recommendation is 2.8, indicating a "Hold" status [2].

The downgrade reflects several key concerns. First, JPMorgan highlights the significant re-gearing expected in 2025/26, with the company facing a 900 percentage point increase in its net debt to capital employed ratio. While Equinor maintains a moderate debt-to-equity ratio of 0.82 and a healthy current ratio of 1.47, the rapid increase in debt could strain its financial flexibility [2].

Additionally, JPMorgan points to Equinor's reliance on European gas as a value driver. Northwest European storage has risen to 65%, and JPMorgan Commodities expects re-stocking to reach 84% capacity by the end of October. This reliance could be further pressured by any potential ceasefire in the Russia-Ukraine conflict, which might weigh on price premia [2].

Furthermore, JPMorgan notes that Equinor's upstream-weighted portfolio and limited refining exposure contribute to its diminished capacity to fund competitive total shareholder return (TSR). The bank forecasts a 2026 free cash flow yield of 5.7%, below the 8.6% sector average [1].

In contrast, JPMorgan has upgraded Repsol (BME:REP) to 'Overweight' due to its leading leverage to diesel and any OPEC-stimulated widening in crude spreads. Repsol's Iberian refining system, with a capacity of near 1 million barrels a day, delivers a middle distillate yield above 50%, the highest in the sector [1].

The downgrade of Equinor comes amidst mixed analyst reactions. While TD Cowen raised its price target for Equinor from $19 to $21, maintaining a Hold rating, other analysts like Barclays and Morgan Stanley have downgraded the stock, citing concerns over its exposure to European gas markets and challenges in low-carbon investments [2].

Institutional investors have also shown interest in Equinor, with several hedge funds recently purchasing new stakes in the company. Aigen Investment Management LP, Sound Income Strategies LLC, and GeoWealth Management LLC, among others, have increased their positions in Equinor shares [3].

As the energy sector continues to evolve, investors should closely monitor Equinor's financial performance and strategic adjustments to assess the impact of these changes on its stock valuation.

References:
[1] https://www.investing.com/news/stock-market-news/jpmorgan-shuffles-eu-oil-and-gas-stocks-with-one-doubleupgrade-one-downgrade-4184172
[2] https://ca.investing.com/news/analyst-ratings/equinor-stock-downgraded-to-underweight-by-jpmorgan-on-regearing-concerns-93CH-4151235
[3] https://www.marketbeat.com/instant-alerts/filing-aigen-investment-management-lp-purchases-new-shares-in-equinor-asa-nyseeqnr-2025-08-11/