"Although the metallurgical company's Q1 2026 results (expected May 13) are likely to show volumes down 15% quarter-on-quarter to 285,000 tonnes (due to delivery shifts in the Middle East), the group's financial structure is deemed significantly more robust," Jefferies argues as its first pillar. Regarding EBITDA for this period, Vallourec is expected to reach the midpoint of its target range (165-195 million euros), proving its ability to maintain margins even during a temporary slowdown. Jefferies forecasts EBITDA of 177 million euros.

"As this impact is expected to persist into the second quarter, we are modeling similar volume and EBITDA levels for that quarter, leading us to adjust our 2026 EBITDA forecast downward by 3%," the broker further explained.

Furthermore, the price target, now set at 28 euros, is based on an expansion of valuation multiples: the EV/EBITDA multiple rises from 6x to 8.5x. The price-to-earnings (P/E) ratio is raised from 10x to 12x. This constitutes the second pillar highlighted by Jefferies.

The final pillar is the 5-year exclusive supply agreement signed by Vallourec with Fervo Energy, a Houston, Texas-based geothermal specialist. This agreement, formalized on April 9 and representing a potential revenue of up to 800 million USD, is intended to support the large-scale deployment of geothermal energy across the United States.

Under this framework, Vallourec will be the exclusive supplier to Fervo Energy for tubular solutions and VAM connections, products that will be entirely developed, manufactured, and tested in the United States at Vallourec's industrial facilities. VAM connections utilize extremely precise threading and specific geometry that allow tubes to be assembled with an ultra-hermetic seal.

This agreement comes amid a rapid acceleration of investment in next-generation geothermal energy (which has increased more than fivefold since 2022 according to the IEA), driven by growing demand for baseload, decarbonized electricity.

Jefferies explained that following the signing of this contract, it has "raised its EBITDA estimates by 2% for 2027 and 4% for 2028, driven by higher volumes and an improved product mix."

Shortly before 4:00 p.m., Vallourec shares were up 4.18% at 24.68 euros.