Total: BarCap upgrades to buy

(CercleFinance.com) - This morning Barclays Capital (BarCap) upgraded its rating on the Total stock to buy ("overweight"), from a previous "equal weight" rating.


The group could pleasantly surprise in the Middle East. BarCap has hence raised its corresponding target price from 57 euros to 60 euros.
After a business trip to the Middle East, analysts have taken stock of national oil companies (NOC), which are true sector giants, such as Saudi Aramco in Saudi Arabia. In recent years, these State-owned companies have been restructured, reduced their costs and increased their productivity, BarCap points out. This could increase the regional prospects of European players, which could thus deepen their relations with NOCs.

Indeed, Total is already one of the most exposed European "majors" in the Middle East, where it generates over 20% of its production, i.e. almost twice as much as BP and Shell. The French group could benefit from the streamlining measures of NOC, which could leave assets free for other operators.

This scenario adds to Total's favourable production profile, its cost discipline and cash generation.



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