Key insights
- HSBC upgraded BP and TotalEnergies to Buy from Hold, citing higher oil, refining, and gas price forecasts. The bank raised earnings and cash flow estimates across its global oil coverage. For BP, HSBC increased its price target, expecting less strategic pressure to sell assets. For TotalEnergies, the upgrade reflects a disappeared valuation premium to Shell and potential for increased buybacks. HSBC maintained Buy ratings on Shell, Repsol
Investing.com -- HSBC on Friday upgraded BP and TotalEnergies to Buy from Hold, raising earnings and cash flow estimates across its global oil coverage after lifting its Brent crude, refining margin, and gas price forecasts.
Analysts led by Kim Fustier raised their 2026 Brent assumption to approximately $90 per barrel from $80, and their 2027 forecast to $85 from $65, citing a partial, gradual recovery in Strait of Hormuz flows. The bank also raised its second-half 2026 TTF gas price forecast to $22.5 per million British thermal units from $16.7, and its 2027 forecast to $17 from $12.
These revisions lifted HSBC’s 2026-28 earnings-per-share estimates across the sector by averages of 19%, 65% and 33%, respectively, with cash flow per share estimates rising by averages of 12%, 30% and 14%. The bank said revisions were largest for international majors given their combined exposure to upstream, refining and trading operations.
For BP specifically, HSBC raised its price target to 640 pence from 570 pence, implying nearly 18% upside. The analysts said they expect BP "to be under much less strategic pressure to sell assets to reduce liabilities," since deleveraging will no longer rely mainly on divestments in a higher oil price environment. They noted BP’s shares currently trade at a roughly 26% discount on 2027 EV/DACF versus Shell and TotalEnergies, and their target assumes that gap narrows by half.
Despite the operational improvement, analysts said they aren’t convinced BP will resume share buybacks before 2028, though this could change if management adopts "a more benign definition of ’gearing’" that excludes hybrids or Macondo-related liabilities.
On TotalEnergies, HSBC raised its price target to €93 from €80, implying 18.4% upside. The bank said it upgraded the stock because its valuation premium to Shell "has disappeared" and buybacks could be raised going forward.
HSBC retained Buy ratings on Shell, Repsol and Chevron. On Chevron, the bank raised its price target to $250 from $218, citing significantly strengthened cash flow forecasts and noting the company has "the lowest" Middle East exposure among the five supermajors. HSBC expects Chevron to lift its annual buyback run rate to $15 billion from $10-12 billion.
Eni, Equinor, Galp and ExxonMobil were kept at Hold, while OMV remains at Reduce. Analysts said Eni’s valuation "relative to peers is currently justified" following strong year-to-date performance, calling the shares "fairly valued" overall.
Across the sector, HSBC said it now assumes higher shareholder distributions from most companies except Exxon and BP, with revised target prices implying 12% average upside sector-wide, and 21% upside specifically across its Buy-rated names.
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