BMO Drops Cenovus Energy Price Target To $6.00 From $7.50

This morning BMO lowered its 12-month price target on Cenovus Energy (TSX: CVE) to C$6.00 from C$7.50 and reiterated its outperform rating on the stock. This comes after Cenovus reported their third-quarter results. Randy Ollenberger, BMO’s analyst, says that Cenovus’ results were slightly below their expectations. He said, “The company’s upstream assets performed well this quarter while the downstream underperformed due to weaker margins and lower utilization.”

Ollenberger acknowledges the mixed reaction to the Cenovus/Husky merger and comments, “we think this could act as a drag on share price performance until the company can demonstrate cost synergies and accelerate debt reduction through asset dispositions.”

Cenovus’ upstream operations beat expectations. Operating margins were $668 million compared to BMO’s estimate of $632 million and the street’s consensus of $625 million. “The beat was primarily due to strong realized pricing at its oil sands assets,” says Ollenberger. However its downstream operations missed, generating an operating margin loss of $74 million. That’s compared to the estimate of a loss of $53 million, and the streets estimated loss of $45 million. Cenovus generated cash flow of $0.34 per share, which is slightly below the consensus of $0.36 per share.

Ollenberger says that, “Cenovus will need to demonstrate the strategic rationale and deliver on its cost reduction targets. We think dispositions (particularly the Asian assets) could accelerate debt reduction and provide a positive surprise.” Both Husky and Cenovus delivered less than stellar third-quarter results, with Husky writing down a significant portion of their prized midstream assets.

With BMO downgrading the stock, Ollenberger has slightly lowered his fourth-quarter and 2020/2021 expectations. You can see the changes below.


Information for this briefing was found via Sedar and Refinitiv. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.

Video Articles

The Goal is Gold Production as Soon as Possible! | Gordon Robb – ESGOLD Corp.

Snowline Gold: The Multi Billion Dollar Valley PEA

Euro Sun: Rovina Copper-Gold Project Secures Some Major Funding

Recommended

Antimony Resources Drills 4.17% Antimony Over 7.4 Metres At Bald Hill

ESGold To Expand Mine Building At Montauban In Advance Of Gold & Silver Production

Related News

WeedMD: Canaccord Initiates Coverage With $0.60 Price Target

Yesterday morning, Canaccord Genuity initiated coverage on WeedMD Inc (TSXV: WMD) with a C$0.60 12-month...

Thursday, March 25, 2021, 11:47:00 AM

Verano Holdings: Canaccord Reiterates $35 Price Target

On April 8th, Verano Holdings (CSE: VRNO) announced their full year 2020 and fourth quarter...

Sunday, April 11, 2021, 01:45:00 PM

Organigram: Canaccord Lowers Price Target To $2.50

Yesterday, Organigram Holdings (TSX: OGI) (NASDAQ: OGI) reported their fourth quarter financials. The company announced...

Tuesday, December 1, 2020, 11:17:00 AM

Great Bear: Canaccord Model Is Based On “Initial Applied Resource Of 4 Million Gold Ounces”

Yesterday, Great Bear Resources (TSXV: GBR) reported results from its ongoing exploration program at their...

Thursday, December 10, 2020, 11:21:00 AM

Nuvei: Canaccord Initiates Coverage With U$105 Price Target, Buy Rating

On Thursday, Canaccord Genuity became the 12th investment bank to initiate coverage on Nuvei Corporation...

Monday, July 12, 2021, 11:44:00 AM