Europe’s Big Oil Is a Buy as Cuts Point to Recovery at Last

Energy companies are finally starting to come back into favor. After enduring the longest oil-price collapse in more than a decade, crashing profits and an investor exodus, Europe’s biggest producers are regaining fans as analysts bet earnings bottomed last quarter and will now start to recover.

While Total SA, the region’s second-biggest oil company, will probably post the worst quarterly performance since 2009, it also has the highest proportion of buy ratings in a year, according to analysts surveyed by Bloomberg. Despite similarly bleak forecasts, Royal Dutch Shell Plc, Europe’s No. 1, has the biggest share of buy recommendations since mid-2012 while BP Plc has the most since February.

The ratings show faith in the producers’ ability to weather the commodities rout, which has seen Brent crude tumble by more than 40 percent in a year and company valuations shrink to at least three-year lows. More analysts now believe that the industry’s sweeping spending cuts, job losses and shuttered output will be sufficient to bolster oil prices and foster profit growth.