First Berlin Equity Research has published a research update on Deutsche Rohstoff AG (ISIN: DE000A0XYG76). Analyst Simon Scholes reiterated his BUY rating and decreased the price target from EUR 48.00 to EUR 40.00.

Abstract
Downward revisions to economic growth forecasts prompted by President Trump’s tariff policies have pushed the oil price down to levels not seen since 2021. Despite this, DRAG is trading at 2025E-2027E PE multiples of below 6x and yielding 5.7%. The unconventional oil wells drilled by DRAG generate 20-25% of their output during their first year of production and so near-term oil price prospects play a key role in drilling decisions. In the current low oil price environment we assume that DRAG will only invest what is necessary to maintain production at or slightly above the 2025 level. We believe this equates to the addition of ca 11 new wells a year at ca. USD10m each. Based on this level of investment for each of the next three years, we estimate that DRAG will be able to keep EBITDA stable at ca. €130m, maintain the €1.75 dividend first paid out last year, and reduce net gearing from ca. 66% at YE 2024 to 52% by YE 2027. Incorporating the current oil, gas and NGL futures strips into our valuation model prompts us to lower our price target from €48 to €40 (29% upside). We maintain our Buy recommendation. Reversion of commodity prices to the mean level of recent years would create additional uplift.