Morgan Stanley reinstated its coverage of Technip Energies on Monday, with an 'overweight' recommendation and a new price target of 26.2 euros, indicating a potential upside of 25%.

In a sector note, the broker believes that the French group's strategy of focusing on the highest-margin contracts that are easiest to monetize is beginning to bear fruit.

While the stock is now trading in line with its peers, compared with a 10% discount at the end of 2022, the broker points out that it still has potential, given the group's attractive positioning in the sought-after themes of energy transition, from carbon capture to hydrogen production.

Morgan Stanley ranks Technip Energies as its top pick in the energy services sector, ahead of Italy's Saipem and Norway's Subsea 7.

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