TotalEnergies: Near-Term Earnings Pressure and Deferred Free Cash Flow Upside Justify Neutral Hold Rating

Analyst Jason Gabelman of TD Cowen maintained a Hold rating on TotalEnergies SE, boosting the price target to $70.00.

Jason Gabelman has given his Hold rating due to a combination of factors linked to near-term earnings pressure and medium-term cash flow dynamics. He trims his fourth-quarter 2025 EPS estimate slightly below both his prior forecast and consensus, reflecting softer expectations in LNG and modest reductions in other segments, only partially balanced by stronger refining margins. While management’s guidance implies a larger-than-expected working capital benefit that should help leverage metrics in the short run, he questions the durability of this boost and anticipates some reversal in 2026. His 2026 cash flow from operations forecast also sits below the street’s view, as lower commodity prices weigh on results despite incremental gains from refining improvements, underlying business growth, and new gas-to-power initiatives.

At the same time, Gabelman recognizes that TotalEnergies offers a solid shareholder return profile, with an attractive dividend yield supported by mid-single-digit annual growth and a buyback program that keeps free cash flow yields competitive. He expects free cash flow to rise over time, but sees the most substantial improvement only materializing closer to 2028–2030, limiting upside in the intermediate term. His updated price target, derived from a net present value approach using free cash flow projections through 2030 and rolled forward to a 2026 base year, suggests a valuation that is neither compellingly cheap nor overly expensive at current levels. Taken together, these elements underpin his decision to maintain a neutral stance and reiterate a Hold rating on the stock.

In another report released yesterday, Scotiabank also maintained a Hold rating on the stock with a $73.00 price target.