TotalEnergies stock rating upgraded to outperform by Bernstein SocGen

Bernstein SocGen Group upgraded TotalEnergies SE (NYSE:TTE) from market perform to outperform on Tuesday, citing the stock’s recent weakness and potential for approximately 25% upside to its price target. According to InvestingPro data, TotalEnergies, with its substantial market capitalization of $141.6 billion, is currently trading at an attractive P/E ratio of 10.4x, suggesting potential undervaluation relative to peers.

The research firm adjusted its price target to EUR67.00 from EUR69.00 for the French energy company. Bernstein SocGen analyst Irene Himona noted that TotalEnergies has performed "fairly weekly" in both dollar and euro terms over the past year, but believes "the weakness has gone far enough."

The upgrade highlights TotalEnergies’ high return on average capital employed (Roace), projected at 11.3% for 2025 compared to 9.7% for the sector, and its high total distribution yield, estimated at 13.4% versus 11.7% for the sector under a $65 per barrel oil price scenario. InvestingPro analysis reveals the company has maintained dividend payments for 49 consecutive years, with a current dividend yield of 4.54%, demonstrating its commitment to shareholder returns. The company maintains a GOOD overall Financial Health Score, operating with moderate debt levels.

Bernstein SocGen also pointed to TotalEnergies’ industry-leading low upstream costs, which the company has "more than halved since 2014" to $4.90 per unit, ranking as "best in class" on unit production costs. The firm noted that TotalEnergies is positioned "at the very low end of the curve" on non-OPEC marginal costs.

The energy company is expected to deliver "one of the strongest 2025-26 production growth rates among its major peers," according to the research note, which also emphasized that TotalEnergies is "well placed" for both potential market scenarios: risks to the upside from war and downside risks from a "fundamentally oversupplied oil market in 2025-26." With annual revenue of $191.6 billion and historically low price volatility, TotalEnergies represents a stable investment option in the energy sector. For deeper insights into TotalEnergies’ valuation and growth prospects, investors can access comprehensive analysis and additional ProTips through InvestingPro’s detailed research reports.

In other recent news, TotalEnergies has announced a series of strategic moves, starting with its acquisition of interests in offshore blocks in Malaysia and Indonesia from PETRONAS. This transaction includes a 50% working interest in Malaysia’s Blocks SK301b and SK313, which hold significant gas reserves. TotalEnergies also expanded its footprint in the U.S. by acquiring a 25% stake in offshore oil and gas exploration areas operated by Chevron (NYSE:CVX). Additionally, the company increased its stake in Brazil’s Lapa offshore field to 48% while reducing its interest in the Gato Do Mato field, reflecting strategic adjustments in its Brazilian portfolio.

In a notable development, TotalEnergies entered a 20-year agreement with Ksi Lisims LNG for 2 million tons per year of liquefied natural gas, alongside acquiring a 5% stake in Western LNG. This aligns with the company’s strategy to diversify its LNG portfolio in North America. Furthermore, Morgan Stanley (NYSE:MS) upgraded TotalEnergies’ stock rating to Overweight, citing the company’s consistent financial strategy amid industry pressures. TotalEnergies continues to maintain its $17 billion budget guidance for 2025 and its $2 billion quarterly share buyback policy, showcasing confidence in its financial strength.

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