Aljazira Capital forecasts higher Q1 profit for Aramco, maintains ‘Overweight’ rating with lower price target

Aljazira Capital expects Saudi Arabian Oil Co. (Aramco) to post an 8.3% rise in first-quarter 2025 net profit from the previous quarter to SAR 94 billion ($25.1 billion), driven by a higher operating profit margin and a slight uptick in revenue.
Revenue is projected to increase 0.3% quarter-on-quarter to SAR 429.7 billion, Aljazira Capital said in a research note.
The brokerage lowered its target price for Aramco shares to SAR 29.6 from SAR 32.1, while maintaining an “Overweight” rating. It said a marginal increase in average crude oil prices (Brent up 0.5% quarter-on-quarter) is expected to support a 0.6% rise in upstream revenues. Oil sales volumes are likely to remain stable as production holds near current levels amid the extension of output cuts by OPEC and its allies.
Gas production is expected to see an uptick in the second half of 2025 with the commencement of Jafurah Phase I. Refining revenues are forecast to remain relatively stable, dipping 0.4% quarter-on-quarter.
Operating profit is estimated to grow 7.5% from the previous quarter to SAR 186.3 billion, with the operating profit margin improving by 300 basis points to 43.4%, helped by the absence of a SAR 8 billion non-cash upstream asset amortization recorded in the previous quarter. The refining business is expected to approach breakeven levels in the absence of one-off items, with steady revenues and stable refining margins.
Looking ahead, Aljazira Capital said Aramco faces near-term revenue pressures amid a challenging global macroeconomic environment, including lower oil prices and persistent trade tensions. The company’s full-year 2025 revenue is expected to decline 3.5% year-on-year to SAR 1.74 trillion, mainly due to an anticipated 12% drop in average oil prices and muted demand across downstream segments.
Dividend payouts are forecast to ease to SAR 1.32 per share in 2025 and SAR 1.34 per share in 2026, reflecting lower free cash flows.
However, Aljazira Capital noted that geopolitical developments, including new rounds of sanctions on Russia, Iran, and Venezuela, could create short-term upside for Saudi crude. Disruptions to global supply chains stemming from the U.S.-China trade war may also bolster demand for Saudi oil, particularly in Asian markets.
Over the longer term, Aramco is expected to benefit from the unwinding of OPEC+ production cuts, expansions in gas output — notably from the Jafurah field’s first and second phases — and increased downstream capacity. Revenue is forecast to rise to SAR 2.05 trillion by 2029, representing a compound annual growth rate (CAGR) of 2.7% over 2024–2029.
EBITDA and operating margins are projected to improve to 52.6% and 46.7%, respectively, by 2029, supported by normalized oil market fundamentals and efficiency gains. Net profit is expected to grow at a 4.1% CAGR, with net margins widening from 21.9% in 2024 to 23.5% in 2029, underscoring Aramco’s resilient long-term fundamentals despite near-term volatility.