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Decarbonization Orders And LNG Expansion Will Drive Global Diversification

Published
16 Dec 24
Updated
11 Oct 25
AnalystConsensusTarget's Fair Value
€42.85
13.9% undervalued intrinsic discount
11 Oct
€36.88
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1Y
75.6%
7D
-6.9%

Author's Valuation

€42.8513.9% undervalued intrinsic discount

AnalystConsensusTarget Fair Value

Last Update11 Oct 25
Fair value Increased 2.58%

Technip Energies' analyst price target has been increased modestly from €41.77 to €42.85. Analysts cite continued improvements in fair value estimates and steady growth prospects as their rationale.

Analyst Commentary

Recent updates from research analysts have highlighted a mix of optimism and caution surrounding Technip Energies' near-term trajectory. The following summarizes the main bullish and bearish takeaways from their latest commentary and recommendations.

Bullish Takeaways
  • Bullish analysts have raised price targets in response to higher fair value estimates and solid operational performance. Some targets now reach as high as EUR 47.
  • There is increased confidence in Technip Energies’ growth prospects, particularly due to its self-help initiatives and positioning within the European oilfield services segment.
  • Several upward price target adjustments point to improved execution. Valuations have also benefited from the company’s steady operational momentum.
  • Ongoing preference for oilfield services over exploration and production according to major institutions bodes well for Technip Energies’ market positioning.
Bearish Takeaways
  • Bearish analysts have downgraded shares to more neutral views, indicating growing caution around additional upside after recent price appreciation.
  • There is some concern over valuation, as certain price targets are set close to current trading levels. This suggests more limited near-term reward potential.
  • Some research notes highlight potential challenges for outperformance versus sector peers. This has led to downgrades from previous positive ratings.

What's in the News

  • Technip Energies awarded two engineering services contracts by Repsol for the Ecoplanta project in Spain. The project aims to convert 400,000 tons of non-recyclable municipal waste into 240,000 tons of renewable methanol annually, supporting the circular economy and delivering significant CO2 emission reductions. (Key Developments)
  • Secured two major Front-End Engineering Design (FEED) contracts for the INPEX Abadi LNG project in Indonesia. These contracts cover both floating production and onshore LNG facilities in partnership with JGC Corporation. (Key Developments)
  • Signed a global alliance with Shell Catalysts & Technologies to deliver post-combustion amine-based carbon capture solutions using Shell’s CANSOLV CO2 Capture System. This alliance aims to enhance scalability and accessibility of carbon capture for industrial sectors. (Key Developments)
  • Added as a constituent to the CAC Next20 Index, reflecting increased visibility within the French equities market. (Key Developments)
  • Completed a tranche of its share buyback program by repurchasing 10,000 shares for €0.4 million between May and June 2025. (Key Developments)

Valuation Changes

  • The Fair Value Estimate has risen slightly from €41.77 to €42.85, reflecting a modest increase in analysts' assessments.
  • The Discount Rate has decreased from 7.06% to 6.91%, indicating a marginal reduction in perceived risk.
  • Revenue Growth projections have edged up from 7.70% to 7.70%, showing a very minor improvement in expectations.
  • The Net Profit Margin has increased gently from 6.54% to 6.57%, suggesting a small gain in expected profitability.
  • The Future P/E Ratio has climbed slightly from 14.14x to 14.36x, pointing to a modestly higher valuation multiple applied by analysts.

Key Takeaways

  • Rising demand for decarbonization and LNG projects, along with geographic and market diversification, supports sustained growth and greater revenue stability.
  • Strategic partnerships, proprietary technology, and TPS segment expansion are driving margin improvement and higher-quality, recurring earnings.
  • Heavy reliance on LNG and hydrocarbons, project timing risks, shrinking margins, fierce competition, and geopolitical pressures threaten Technip Energies' future revenue stability and earnings quality.

Catalysts

About Technip Energies
    Operates as an engineering and technology company for the energy transition in Europe, Central Asia, the Asia Pacific, Africa, the Middle East, and the Americas.
What are the underlying business or industry changes driving this perspective?
  • Significant recent growth in decarbonization-related orders (now nearly 40% of total intake and over €5 billion in the last 18 months), combined with global net-zero commitments and increasing government incentives for clean energy infrastructure (like CCUS and blue hydrogen), indicates substantial forward demand that should support backlog expansion and sustained top-line revenue growth.
  • Continuing leadership and solid execution in LNG projects (with major activity in Qatar, new contracts in Africa, and anticipated awards in the U.S.) positions Technip Energies to disproportionately benefit from the long-term role of natural gas in balancing grid intermittency and rising power demand, particularly in emerging markets, which is likely to drive revenue and earnings growth in coming years.
  • Strategic partnerships and proprietary technology development (such as the exclusive alliance with Shell for carbon capture and commercialization of low-emission ethylene furnace technology) are enabling market share gains in high-value projects, supporting margin improvement and higher-quality, more resilient earnings.
  • Geographic and market diversification in the company's order book-with around 70% of new orders from outside the Middle East and increased activity in the Americas, Europe, and Asia-reduces regional dependency risks and increases revenue and earnings stability.
  • Expansion of the Technology, Products & Services (TPS) segment into consultancy, lifecycle solutions, and high-margin proprietary process technology (demonstrated by upgraded margin guidance and sustained performance) is expected to generate more recurring, higher-margin revenue streams, positively impacting overall company net margins and earnings quality.

Technip Energies Earnings and Revenue Growth

Technip Energies Future Earnings and Revenue Growth

Assumptions

How have these above catalysts been quantified?
  • Analysts are assuming Technip Energies's revenue will grow by 7.6% annually over the next 3 years.
  • Analysts assume that profit margins will increase from 5.4% today to 6.5% in 3 years time.
  • Analysts expect earnings to reach €588.5 million (and earnings per share of €3.25) by about September 2028, up from €393.6 million today. However, there is some disagreement amongst the analysts with the more bearish ones expecting earnings as low as €501.1 million.
  • In order for the above numbers to justify the analysts price target, the company would need to trade at a PE ratio of 14.0x on those 2028 earnings, down from 17.9x today. This future PE is greater than the current PE for the FR Energy Services industry at 9.8x.
  • Analysts expect the number of shares outstanding to decline by 2.28% per year for the next 3 years.
  • To value all of this in today's terms, we will use a discount rate of 6.96%, as per the Simply Wall St company report.

Technip Energies Future Earnings Per Share Growth

Technip Energies Future Earnings Per Share Growth

Risks

What could happen that would invalidate this narrative?
  • Technip Energies' near-term and medium-term revenue is highly levered to LNG and hydrocarbon project activity, as evidenced by strong 1H25 revenue/EBITDA growth driven primarily by existing and new LNG awards; any long-term structural decline in natural gas or hydrocarbons due to the accelerating wave of renewables and global decarbonization efforts could reduce addressable market size, risking revenue and backlog stability.
  • The company's backlog and performance are increasingly dependent on timely final investment decisions (FIDs) for key LNG and decarbonization projects in the U.S. and abroad; persistent delays, cancellations, or policy reversals (such as U.S. DOE funding changes or Section 45V tax credit uncertainties) may result in deferred revenue recognition and higher project concentration risk, impacting both top-line growth and earnings visibility.
  • Margin volatility is present, with EBITDA margin contraction at the project delivery level due to a portfolio shift toward early-phase projects with inherently lower profitability-suggesting that as the mix changes or as project awards tilt to newer, competitive markets (like CCUS and blue molecules), margins and earnings may be pressured in the long term as legacy projects wind down faster than new revenues scale up.
  • Intense competition and increasing commoditization within global EPC markets, especially for LNG and emerging decarbonization projects, risk eroding Technip Energies' profit margins and competitive edge; digital innovation and automation trends may further favor faster-moving or more technology-driven competitors if Technip Energies' own investments do not keep pace, threatening long-run earnings quality.
  • Geopolitical, regulatory, and foreign exchange (FX) risks remain elevated given Technip Energies' growing geographic diversification beyond the Middle East, with 70% of new orders coming from other regions; adverse FX impacts already contributed to lower reported backlog and could continue to compress reported revenues, while shifting political/regulatory environments (e.g., U.S. energy policy or European incentive structures) may create uncertainty and execution risk, affecting long-term earnings predictability and capital allocation.

Valuation

How have all the factors above been brought together to estimate a fair value?
  • The analysts have a consensus price target of €41.077 for Technip Energies based on their expectations of its future earnings growth, profit margins and other risk factors. However, there is a degree of disagreement amongst analysts, with the most bullish reporting a price target of €50.0, and the most bearish reporting a price target of just €33.0.
  • In order for you to agree with the analyst's consensus, you'd need to believe that by 2028, revenues will be €9.1 billion, earnings will come to €588.5 million, and it would be trading on a PE ratio of 14.0x, assuming you use a discount rate of 7.0%.
  • Given the current share price of €39.88, the analyst price target of €41.08 is 2.9% higher. The relatively low difference between the current share price and the analyst consensus price target indicates that they believe on average, the company is fairly priced.
  • We always encourage you to reach your own conclusions though. So sense check these analyst numbers against your own assumptions and expectations based on your understanding of the business and what you believe is probable.

How well do narratives help inform your perspective?

Disclaimer

AnalystConsensusTarget is a tool utilizing a Large Language Model (LLM) that ingests data on consensus price targets, forecasted revenue and earnings figures, as well as the transcripts of earnings calls to produce qualitative analysis. The narratives produced by AnalystConsensusTarget are general in nature and are based solely on analyst data and publicly-available material published by the respective companies. These scenarios are not indicative of the company's future performance and are exploratory in nature. Simply Wall St has no position in the company(s) mentioned. Simply Wall St may provide the securities issuer or related entities with website advertising services for a fee, on an arm's length basis. These relationships have no impact on the way we conduct our business, the content we host, or how our content is served to users. The price targets and estimates used are consensus data, and do not constitute a recommendation to buy or sell any stock, and they do not take account of your objectives, or your financial situation. Note that AnalystConsensusTarget's analysis may not factor in the latest price-sensitive company announcements or qualitative material.

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