Bank of America just raised its EUR/USD forecast
On Thursday, Wolfe Research maintained its Outperform rating on TotalEnergies (EPA:TTEF) SE (NYSE:TTE) stock, with a steady price target of $81.00. TotalEnergies' stock has been one of the top performers in the European and Global oil sectors over the last five years, with a strategic focus on oil and gas development to drive cash flow growth. This approach, coupled with the decision not to cut dividends in 2020, is seen as a key factor in the company's strong market performance.
TotalEnergies' management has recently confirmed their 2024 strategy, which includes a commitment to return at least 40% of operating cash flow to shareholders through buybacks and dividends. For 2025, the company anticipates a share buyback pace of $2 billion per quarter and aims for a 5% growth in dividend per share. With an expected free cash flow growth of $5 billion to $10 billion at a Brent oil price of $60 to $80, TotalEnergies is projected to sustain dividend growth that aligns with Wolfe Research's Discounted Cash Flow (DCF) valuation.
The company's strategy update also suggests a potential conversion of its American Depositary Receipts (ADRs) into regular shares to simplify investments for U.S. shareholders. The analyst believes that TotalEnergies' capacity for dividend growth could surpass its previous five-year plan, further solidifying its financial position. The updated outlook also indicates a potential to lower the dividend breakeven point below $40, supporting continuous significant growth in per-share dividend, which is expected to drive market value recognition.
In other recent news, TotalEnergies has reported robust Q2 earnings with an adjusted net income of $4.7 billion and a significant cash flow of $7.8 billion. The company also confirmed its commitment to a cash flow from operations payout ratio of over 40% and plans to continue with an $8 billion share buyback program in 2024. This is expected to result in distributions amounting to more than 45% of its 2024 cash flow.
TotalEnergies and APA Corp have committed to a $10 billion investment in Suriname's Block 58, marking the onset of offshore production for the nation. RBC Capital maintained its Sector Perform rating and €80.00 price target on TotalEnergies, while TD Cowen maintained a Hold rating. HSBC also updated its outlook on TotalEnergies, raising the price target to EUR70.40 from EUR69.20, maintaining a Buy rating due to the company's strong distribution yield and clear visibility on growth prospects.
In collaboration with Shell (LON:SHEL) and Equinor, TotalEnergies has completed a joint carbon dioxide storage project in Norway, with first deliveries expected in 2025. This significant development in carbon capture and storage technology is part of the Longship project. These are among the recent developments for TotalEnergies.
InvestingPro Insights
TotalEnergies SE's financial metrics and market position align well with the positive outlook presented in the article. According to InvestingPro data, the company's P/E ratio stands at 7.48, indicating that it's trading at a relatively low valuation compared to its earnings. This is further supported by an InvestingPro Tip highlighting that TotalEnergies is "Trading at a low P/E ratio relative to near-term earnings growth."
The company's commitment to shareholder returns, as mentioned in the article, is reflected in its dividend yield of 3.84% and a dividend growth rate of 8.79% over the last twelve months. An InvestingPro Tip notes that TotalEnergies "Has maintained dividend payments for 48 consecutive years," underscoring its long-term commitment to returning value to shareholders.
TotalEnergies' financial strength is evident from its revenue of $210.24 billion and an EBITDA of $41.9 billion over the last twelve months. The company's profitability is also highlighted by an InvestingPro Tip stating that it has been "Profitable over the last twelve months."
For investors seeking more comprehensive insights, InvestingPro offers additional tips and analysis on TotalEnergies. Currently, there are 10 more InvestingPro Tips available for this stock, providing a deeper understanding of its market position and potential.
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