On Thursday, CFRA, a prominent financial research firm, increased its price target on shares of TotalEnergies (EPA:TTEF) SE (NYSE:TTE) to $80.00, up from the previous target of $71.00. The firm has reaffirmed its Buy rating on the stock, signaling confidence in the energy company's financial prospects.
The adjustment in the price target to $80.00 is based on a price-to-net-asset-value (P/NAV) ratio of 1.6 times, which is above the average of 1.4 times among TotalEnergies' peers. This higher ratio is deemed appropriate by CFRA due to TotalEnergies' superior return on equity (ROE). In line with these changes, CFRA has also revised its earnings per share (EPS) forecasts for the company, increasing the 2024 EPS estimate to $9.50, up from $9.25, and the 2025 EPS projection to $9.55, up from $9.40.
The firm cites several factors that could positively influence TotalEnergies' performance. Among these is the rising concern over supply security, heightened by a recent drone attack on Russian refineries. This incident is expected to temporarily drive up hydrocarbon prices and refining margins.
Furthermore, with the approach of the driving season, a softer growth in electric vehicle sales in 2024, and the anticipated replenishment of the U.S. strategic petroleum reserve, the firm anticipates that the boost in hydrocarbon prices could be sustained over a longer period.
CFRA's continued endorsement of a Buy rating for TotalEnergies is rooted in the company's strong fundamentals. The firm highlights TotalEnergies' low pre-dividend free cash flow breakeven point, which is below $25 per barrel of Brent crude.
Additionally, TotalEnergies has a defensive upstream asset portfolio that is expected to deliver a steady 2% annual growth in hydrocarbon production. The company's focus on cost-effective liquefied natural gas (LNG) projects and a robust renewable energy portfolio that generates significant cash flow from operations (CFFO) also contribute to CFRA's positive outlook.
InvestingPro Insights
Following CFRA's increased price target and Buy rating for TotalEnergies SE (NYSE:TTE), real-time data from InvestingPro reinforces the firm's confidence in the company's financial health. TotalEnergies SE boasts a robust market capitalization of $175.33 billion, underscoring its significant presence in the industry. The company's current P/E ratio stands at an attractive 8.24, suggesting that its stock might be trading at a low price relative to its near-term earnings growth, in line with CFRA's analysis. Additionally, TotalEnergies SE is trading near its 52-week high, with a price percentage of 99.81% of that peak, indicating strong market confidence.
InvestingPro Tips highlight TotalEnergies SE's high shareholder yield and its status as a prominent player in the Oil, Gas & Consumable Fuels industry. Moreover, the company has demonstrated stability by maintaining dividend payments for an impressive 48 consecutive years, with a current dividend yield of 3.31%. These factors, combined with a moderate level of debt, present TotalEnergies as a potentially resilient investment. For investors seeking more in-depth analysis, there are additional InvestingPro Tips available, which can be accessed with a subscription. Use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription, unlocking valuable insights for making informed investment decisions.
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