Saudi Aramco is forecasted to report a 20% year-on-year (YoY) drop in net profit for Q3 2024, largely due to “weaker upstream realizations, lower refining margins, and expected inventory losses,” according to a report by Citigroup Global Markets Inc.
Citi Research estimates Aramco’s net profit at $26.3 billion for the quarter, revising its previous forecast down by 11%. Additionally, Citi has lowered the target stock price to 29.5 riyals ($7.87) from the earlier estimate of 30 riyals, while maintaining its ‘Neutral’ rating for the stock.
The report notes that Aramco’s free cash flow (FCF) yield is expected to be 3.6% in 2025, lower than the average for international oil companies (IOCs). Citi’s analyst Alastair R Syme points out that while Aramco’s valuation is currently at a premium compared to its peers, the company’s extensive oil reserves, projected to last over 60 years, remain a significant advantage.
“Aramco’s equity story may be more appealing in an environment of lower oil prices,” Syme added.
Saudi Aramco is expected to release its Q3 2024 earnings on November 5.
