Top Integrated Oil Stock According To TD Cowen

Investing.com -- TD Cowen has identified its top stock pick in the integrated oil and major producers sector, maintaining a bullish stance on TotalEnergies SE with a Buy rating and a price target of $105.00.

The firm continues to view TotalEnergies as the highest quality integrated oil company among its peers, citing industry-leading return on capital employed, production growth, and free cash flow growth. TD Cowen notes that TotalEnergies has underperformed peers by 9% over the past month and is now trading near the cheapest free cash flow yield on 2027 estimates and at the cheapest return yield.

TotalEnergies SE

TD Cowen maintains its Top Pick status for TotalEnergies with a Buy rating and $105 price target. The company's third quarter results came in largely in line with expectations, while management indicated that strong trading performance should continue into the fourth quarter. TotalEnergies downplayed interest in liquids-focused U.S. shale mergers and acquisitions, instead maintaining its focus on U.S. shale gas assets. The company clarified it would not acquire liquids assets currently given its countercyclical approach, though it remains open to acquiring liquids alongside gas properties. TotalEnergies reiterated its 2% to 3% production growth target from 2030 to 2035, which does not include any large merger and acquisition activity. The company noted it can maintain flat production with currently identified projects and does not have urgency in adding resources. Regarding recent concerns about French government uncertainty, TotalEnergies reported that the French parliament did not progress any tax-related items against the company last week. The company has approximately 7% of its capital employed within France and spends $500 million annually subsidizing energy costs in the country. Management suggested it could meet its 2026 payout ratio with a dividend adjustment if necessary, while first quarter 2027 buybacks were guided to $2.5 billion. TD Cowen values TotalEnergies on a net present value of free cash flow to 2030, with 2030 as a terminal year valued at 8%.

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