Saudi Aramco gets new bull on Wall Street as Jefferies starts at Buy By Investing.com

Investing.com — Saudi Aramco has gained a new backer on Wall Street, with Jefferies initiating coverage on the stock with a Buy rating and a price target of SAR 32 per share, implying a total shareholder return (TSR) of 24%.

In its note, Jefferies highlights Aramco’s unique position in the oil and gas sector, citing its strong influence on oil markets, low cost base and ability to maintain an attractive dividend yield, estimated at 4.6% in 2025.

Jefferies views Saudi Aramco (TADAWUL:) as a top business in the industry.

“Whether we look at costs, asset longevity or cash flow breakeven, ARAMCO has the best asset base in the sector,” the analysts write.

The company’s production of about 10 percent of global crude supply, combined with its control of spare capacity equivalent to 3 percent of global demand, allows it to influence oil prices — a key advantage, especially as the Saudi government focuses on maximizing revenue.

Despite market uncertainty surrounding oil demand and OPEC+ policies, Jefferies does not expect a significant rise above $80 per barrel for oil prices.

However, Aramco will benefit from volume increases, with the potential to increase production by up to 1 million barrels per day in 2025. Analysts also point out that Aramco’s dividend policy is one of the most generous in the sector, and the company it is well positioned to maintain payouts even if macro conditions weaken.

While Aramco trades at a premium to its peers, Jefferies says this is justified by the company’s superior yields and asset longevity.

“At approximately $55 billion in capital, ARAMCO will be able to cover its regular dividend until an oil price of approximately $70/bbl,” they point out, underscoring the stock’s appeal to investors seeking stability in the oil sector and gases.