Balanced Outlook on TotalEnergies: Strategic Low-Carbon Transition and Market Risks Justify Hold Rating

DBS analyst Suvro Sarkar maintained a Hold rating on TotalEnergies SE (TTE – Research Report) today and set a price target of €62.50.

Suvro Sarkar’s rating is based on TotalEnergies SE’s consistent cash flow generation and its strategic transition towards low-carbon initiatives. Despite a quarterly drop in adjusted net income due to lower oil prices and weak refining margins, the company’s financial stability remains intact, supported by a robust shareholder return yield split between dividends and share buybacks. TotalEnergies is advancing its hydrocarbons growth while also making significant strides in clean energy transformation, aiming to rank among the top global renewable players by 2030. This dual focus reflects positively on its ESG scores, maintaining a favorable return on equity compared to peers.
Suvro Sarkar has given his Hold rating due to a combination of factors including the company’s exposure to market risks such as fluctuations in oil and gas prices and potential impacts from its Russian assets. While TotalEnergies is strategically positioned to benefit from the high spot LNG prices due to Europe’s transition away from Russian gas, these market uncertainties could limit share price appreciation. The company’s commitment to shareholder returns remains a positive aspect, yet the muted operating environment suggests that the stock price may not see significant gains in the near term. Consequently, the Hold rating reflects a cautious but balanced outlook on TotalEnergies’ stock performance.

Sarkar covers the Energy sector, focusing on stocks such as Chevron, Conocophillips, and EOG Resources. According to TipRanks, Sarkar has an average return of 3.8% and a 53.33% success rate on recommended stocks.

In another report released today, TD Cowen also maintained a Hold rating on the stock with a $72.00 price target.