Translation: Original published in Finnish on 10/20/2026 at 11:45 pm EEST.

Neste will publish its Q3 earnings on Thursday of next week at around 9:00 am EET. In terms of earnings, we expect the period to have been excellent despite the production losses caused by the Porvoo maintenance turnaround. The excellent earnings performance of both main segments is driven by record-high refining margins. Although we have substantially raised our short-term margin expectations, we believe the share pricing should be based on the expected margin levels over the long term. Therefore, we reiterate our EUR 35.0 target price and retain our Accumulate recommendation.

Earnings expectations high for Q3

We have raised our short-term estimates and expect Neste to have reached a comparable EBITDA of ~1.2 BEUR in Q3’26, which would be more than double the earnings from the comparison period level. The demand picture for Renewable Products has remained quite good, and supply constraints in the European market are supporting margins for renewable diesel in road transport. Margins will continue to be boosted by the scarcity of traditional diesel refining capacity in the Middle East and Russia. The same supply-constrained nature of traditional diesel has also been visible in the refining margin, which has hit record highs in Q3. We estimate that the volume growth of Renewable Products remained subdued in Q3, reflecting production constraints, but our forecasts show that the significant year-on-year increase in sales margins (Q3’26e USD 1,150/ton vs. Q3’25 USD 480/ton) will more than triple its earnings. The maintenance turnaround in Porvoo has also significantly lowered the sales volume of Oil Products, yet we still expect its earnings to have exceeded those of the comparison period, boosted by a refining margin that has more than doubled.

Volume outlook is unchanged

The Porvoo maintenance turnaround has been successfully completed, and therefore, in our view, the full-year production outlook has remained unchanged. The rest of the year still features the usual maintenance turnarounds for Renewable Products, but we expect the company to reiterate its previous loose outlook for the current year, which points to a decrease in Oil Products' sales volumes and sales volumes for Renewable Products roughly at the level of the previous year.

We also raised our forecasts for the coming quarters

The margin outlook remains strong for both business segments beyond the just-ended quarter, as market growth driven by Renewable Products regulations will continue to create supply constraints given the industry’s long investment cycles. A solution to the shortage of fossil diesel refining capacity is not expected either, as long as geopolitical conflicts continue. Given this situation, we have made broader upward revisions to our forecasts for H2’26 and next year in both segments. Consequently, our comparable EBITDA forecast for 2027 increased by 16%. While we believe the market will stabilize and margins will decline from current levels in the long term, it is very difficult to predict when this will happen.

Valuation is attractive

Since we believe margins will return to lower levels in the long term, we do not base our view of the stock’s value on its short-term record-high margins. According to our 2028 estimates, which are based on lower margin levels, we calculate that Renewable Products trades at an EV/EBIT multiple of around 9x. We believe this is an attractive level relative to the quality of the business, and at the same time reflects the fact that the market does not consider current margin levels to be sustainable in the long term. In our view, this is warranted but, against this backdrop, we also find the risk/reward ratio of the share attractive.