JPMorgan downgrades TotalEnergies stock rating on valuation

JPMorgan has downgraded TotalEnergies' stock rating to Neutral from Overweight, setting a price target of EUR83.00. Despite the stock's 40% year-to-date increase, the firm believes the shares may be undervalued relative to Fair Value estimates. JPMorgan maintains that the company's long-term fundamentals remain strong, particularly its multi-year growth backed by a solid balance sheet and expected top-line growth driven by a 2030+ roadmap.

The firm projects a 9% free cash flow yield for fiscal year 2027, with a 100-150 basis point premium compared to UK majors. Concerns remain over TotalEnergies' substantial exposure to the Middle East, especially given ongoing Hormuz disruptions and upcoming fiscal year targets with diminished upside. The company's strategic move into the Bab Gas Cap Concession in Abu Dhabi, holding a 10% stake alongside other major players, signals an expansion in the gas sector.

Mizuho has also initiated coverage, rating TotalEnergies as Outperform with a price target of $103.00, highlighting the company's dual-engine growth strategy that balances traditional hydrocarbons and low-carbon power generation.