TotalEnergies: Analysts Trim EPS Forecasts Amid Mixed Signals in Energy Transition

TotalEnergies (TTEN.MX) has entered 2025 amid conflicting signals from analysts and investors. While Citigroup recently upgraded the stock to Buy, AlphaValue/Baader Europe trimmed its 2025 earnings per share (EPS) forecasts, highlighting the challenges oil majors face balancing near-term resilience with long-term decarbonization risks. This article dissects the latest analyst actions, operational performance, and market skepticism shaping TotalEnergies’ valuation.

The Analyst Divide: Citigroup’s Bullish Call vs. EPS Downgrades

On March 26, 2025, Citigroup upgraded TotalEnergies to Buy from Neutral, citing strong Q1 2025 operational results. Hydrocarbon production rose 4% year-on-year to 2.55 Mboe/d, while LNG prices averaged $10/Mbtu—up from $9.58 in 2024. These factors, combined with stable integrated power division performance, underpinned Citigroup’s optimism about near-term cash flow.

However, AlphaValue/Baader Europe countered this optimism on April 18, 2025, trimming its 2025 EPS forecasts due to lower commodity price assumptions and weaker refining margins. The analyst firm reduced its Brent crude price forecast to $75/b from $80/b, while natural gas prices were revised downward. Refining margins in Europe, already pressured by overcapacity, were also downgraded, compounding headwinds for TotalEnergies’ downstream business.

Operational Resilience vs. Transition Pressures

TotalEnergies’ Q1 2025 results showcased operational strengths but also vulnerabilities tied to its reliance on fossil fuels:
- Production & Pricing: Hydrocarbon volumes grew 4% YoY, supported by higher Brent prices ($75.7/b) and LNG pricing.
- Refining & Chemicals: Margins slumped to $29.4/t in Europe, down from $71.7/t in Q1 2024, as petrochemical overcapacity weighed.
- Scope 3 Emissions: TotalEnergies remains under fire for its 25% carbon intensity reduction target for Scope 3 emissions (end-use of fossil fuels) by 2030—a relative, not absolute, goal. Critics argue this fails to address stranded asset risks as renewables gain traction.

Market Pricing in Downgrade Expectations

While formal ratings remain stable (S&P: A+, Moody’s: A1), the bond market is pricing in future downgrades. TotalEnergies’ EUR 1.3bn 20-year bond issued in March 2025 was priced at MS+140bp, reflecting investor skepticism about its creditworthiness. Analysts note its bonds now trade at levels consistent with an A3 rating, nearly three notches below its current Aa3 Moody’s rating. Peers like BP and Shell face similar pricing pressures, signaling broader investor doubts about oil majors’ transition strategies.

Key Risks and Catalysts

1. Near-Term Catalysts:
2. Q2 2025 Results: Will Brent prices (~$75/b) and LNG margins hold?

3. Refining Turnaround: Can TotalEnergies stabilize European refining margins amid overcapacity?

4. Long-Term Risks:

5. Scope 3 Emissions: Regulatory penalties or stranded assets if fossil fuel demand collapses faster than expected.
6. ESG Credit Downgrades: Bond market pricing suggests a two-to-three-notch downgrade is priced in over the next decade.

Conclusion: A Stock at the Crossroads of Transition

TotalEnergies is a microcosm of the energy sector’s existential dilemma. Citigroup’s Buy rating reflects its operational resilience in Q1 2025, with production growth and commodity price support. However, AlphaValue’s EPS downgrade underscores near-term risks from refining headwinds and weaker commodity assumptions.

The bond market’s pricing of future credit downgrades highlights a deeper issue: investors doubt TotalEnergies’ ability to pivot from fossil fuels fast enough to avoid stranded assets. While its 2050 net-zero plan aims to shift 50% of energy production to electricity and low-carbon molecules, 90% of 2023 revenue still flows from oil and gas—a dependency that clashes with IEA projections of 70% oil demand declines by 2050 under net-zero scenarios.

For investors, the stock offers short-term upside from current operational metrics but carries long-term transition risks. The EUR 1.3bn bond issuance at MS+140bp—a spread suggesting a credit downgrade—is a stark reminder that TotalEnergies’ future hinges on executing its ESG strategy faster than the market’s clock.

In sum, TotalEnergies remains a buy for those betting on its near-term cash flow, but long-term holders must grapple with the inevitability of a low-carbon world—and whether the company can adapt quickly enough to avoid becoming a relic of the fossil fuel era.