Suncor Energy’s Analyst Ratings: The Majority Says ‘Buy’
Must-Read Company Overview of Suncor Energy: An Oil Sand Play
Suncor’s analyst ratings
Suncor Energy’s (SU) analyst ratings show that 56% of the surveyed analysts covering the stock rate it as a “buy.” The highest 12-month price target for SU stands at $32, indicating a 31% gain from the current level. Around 33% of the analysts rate it as a “hold.”
The average 12-month price target for Suncor stands at $27, indicating an 11% gain from the current level. Around 11% of analysts rate Suncor as a “sell.” The lowest 12-month price target for SU stands at $19, indicating a 22% fall from the current level.
Suncor Energy’s peers YPF SA (YPF), ENI SPA (E), and Cenovus Energy (CVE) have been rated as a “buy” by 80%, 33%, and 42% of analysts, respectively. For exposure to large-cap and energy stocks, you can consider the PowerShares Dynamic Large Cap Value ETF (PWV), which has ~10% exposure to energy sector stocks.
Suncor’s capex position and costs program, and acquisitions
Suncor Energy (SU) is maintaining strict capital discipline, in terms of capex as well as operating costs. With this aim, SU has lowered its capex guidance to $6 billion–$6.5 billion Canadian for 2016 compared to its earlier guidance of $6.7 billion–$7.3 billion Canadian. Suncor has incurred capex of $6.2 billion Canadian in 2015, the majority of which was in the upstream segment.
Suncor’s cost control initiatives have yielded results, whereby the operating costs of the company have been reduced by $1 billion Canadian in 2015. Plus, the per-barrel oil sands cash cost fell by 20% over 4Q14 to $28 Canadian per barrel in 4Q15. This is in sync with SU’s aim of sustaining at lower levels in the oil price cycles.
Suncor’s acquisitions
Moving on to acquisitions, in 2015, Suncor (SU) acquired 10% additional interest in the Fort Hills project, raising its working interest to 50.8% in the project. It is expected to start production in 4Q17.
Suncor also entered an amalgamation agreement with Canadian Oil Sands Ltd, further expanding its oil sands portfolio. With this acquisition, Suncor’s interest in Syncrude, which has a capacity of 350,000 barrels per day of synthetic crude oil, should increase from 12% to 48.7%. Suncor continues to maintain its focus on the Hebron project (where SU has 21% working interest) off the east coast of Canada, which is expected to start up by late 2017.
Browse this series on Market Realist:
