What Wall Street is expecting from Shell, TotalEnergies and BP earnings

Published Tue, Jan 31 20237:24 PM EST

European energy giants are expected to post record annual profits this earnings season, despite multi-billion-dollar windfall taxes . On Thursday, Europe's largest energy company Shell is due to report earnings. Britain's BP and France's TotalEnergies are also due to report the following week. It comes after Exxon , the biggest oil & gas company in North America, posted earnings and revenue that beat analyst expectations Tuesday. Similarly, Chevron reported record profits last week. Here's what analysts are expecting from Shell, TotalEnergies and BP: Shell, Feb. 2 JP Morgan — Overweight, price target £29.50 ($36.29) (25% upside) Analysts led by Christyan F Malek said improved trading at Shell's integrated gas unit was a "key" data point for investors in the fourth quarter. They added: We remain [overweight] ahead of FY results Feb. 2 which will provide a first marker of new CEO Wael Sawan's value focus, which we expect to include highgrading objectives in areas including [integrated gas] execution and working [capital management]. We reiterate Shell as a key OW in 2023. Jefferies – Buy, price target £31 (32% upside) Giacomo Romeo and colleagues said Shell is expected to raise its share buyback to $5 billion, significantly more than the consensus estimate of $3.8 billion. Our FY22 estimate falls by 9% to $36.1bn … FY23 & FY24 estimates also fall by 7% and 1% mainly due to higher taxes in Upstream as the company clarified the accounting treatment of European windfall taxes. Credit Suisse - Outperform, price target £35 (49% upside) Wael Sawan will make his debut as CEO during 4Q22 results, but it is worth noting he is well known to investors. We do not expect a major strategic update at these results but rather a standalone event in mid-2023 to ensure due market attention. BP, Feb. 7 Bank of America – Hold, price target £5 (3% upside) Analysts led by Christopher Kuplent told clients that the oil and gas sector would "end the year on a let-down," thanks to a drop in wholesale oil and gas prices over the last quarter. "We expect 4Q22 clean net income at $5.3bn - vs. company-collected consensus of $5.04bn and down from $8.15bn in 3Q22. We are above consensus in Upstream and below in Downstream. UBS – Buy, price target £5.35 (11% upside) We forecast a weaker quarter for BP, impacted by the lower commodity prices, the ongoing Freeport LNG outage, as well as planned and unplanned maintenance in refining… The latter means we do not expect the company to have fully captured the higher refining margins q/q. Morningstar – price target £5.5 (13.6% upside) Analyst Allen Good said BP had weathered a big hit to earnings due to the write-off of its Russian investments in state-owned Rosfnet. We have stripped Rosneft's earnings and value from our model given the uncertainty surrounding its ultimate disposition. Oil prices, the ruble, and Russian equity markets remain volatile and BP's valuation is likely to vary as a result until the outcome of the exit is set. Total Energies, Feb. 8 S3 Analytics: TotalEnergies is the most shorted stock in Europe, with $16.2 billion betting on a fall in share price, according to data analytics provider S3 Partners. Nearly one in ten shares of the Paris headquartered company that is freely traded is held short as of Jan. 24. RBC Capital Markets – Hold, price target 70 euros ($76) (25% upside) Headline indicators across liquids, gas and refining margins were worse than we anticipated; however, stronger LNG trading in 4Q, off an already strong base in 3Q, as well as better trading in the downstream help offset this weakness. Morningstar – Price target 62 euros (8.7% upside) We are reducing our fair value estimate for Total to EUR 62 per share largely due to a stronger euro after updating our model with the latest capital spending guidance, financial results, and oil prices. — CNBC's Michael Bloom contributed to this report