Aside from a spike in volatility over the past summer, France-based integrated oil company TOTAL S.A. (TOT) has a two-year chart with an enviably steady price appreciation for its shares. European-based equities analyst Santiago Burgaleta, CFA explains today why he is raising his six-month target price on the company stock:
'We maintain our Buy rating on TOTAL ADRs after the company reported third quarter results. We continue to like the company for its positive production-growth profile, attractive returns and an improving outlook for the refining and chemical businesses.
'We also like the company's active share buyback program and the recent increases in the dividend. Growth in production now is higher than its peers, and we expect momentum to accelerate in the coming quarters. We increase our price target as earnings momentum improves.
'Our target price of $88 is based on the expectation that TOTAL's trading multiple will expand to the 13.0x to 14.0x range thanks to its restructuring initiatives in its chemicals business and its industry-leading returns on capital. The justification for the premium multiple, in our view, comes from TOTAL's strong growth prospects, attractive returns and the improving outlook for its refining and chemical businesses and higher dividends.'
Read the full analyst report on TOT.
Get real-time market insights and profitable stock recommendations from the team of analysts at Zacks Equity Research. See all todays Analyst Blog entries on Zacks.com.