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Analysts’ Favorite Integrated Energy Stocks: Here Are the Top 10

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Part 6
Analysts’ Favorite Integrated Energy Stocks: Here Are the Top 10 PART 6 OF 11

Analyst Ratings for Cenovus: No. 5 with the Most ‘Buy’Ratings

Analyst ratings for Cenovus

In the previous part of this series, we looked at analyst ratings for Chevron (CVX). Now let’s look at analyst ratings for Cenovus Energy (CVE). Cenovus is a Canadian integrated energy company with oil sands, deep basin, and refining and marketing business segments. The company’s market cap (capitalization) of $11.0 billion ranks it the second-smallest among the ten integrated energy companies in this series.

Analyst Ratings for Cenovus: No. 5 with the Most &#8216;Buy&#8217;Ratings

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The analyst rating graph above shows that seven (or 54.0%) of the 13 analysts covering CVE have rated it a “buy” in September 2017. Another five analysts (or 38.0%) have rated it a “hold.” The remaining one (or 8.0%) has rated CVE a “sell.” CVE’s peers with lower “buy” ratings include Eni SpA (E), Petrobras (PBR), and Total (TOT), which have been rated a “buy” by 50.0%, 47.0%, and 17.0% of analysts, respectively.

Changes in mean target price

Compared to September 2016, analyst ratings for CVE have changed. In September 2016, CVE had fewer “buy” ratings and more “hold” ratings. During the same period, its mean target price fell 40.0% to 12.7 CAD (cash available for distribution) (or $10.40) per share. The mean target price implies a 20.0% rise from the current level. Its implied gains have stayed constant as the stock and mean target price have both fallen 40.0% from September 2016 to September 2017. However, Cenovus stock has risen 17.6% in the current quarter (July 3).

Valuations

Cenovus trades above the peer average forward PE (price-to-earnings) multiple. Cenovus also trades at 8.3x for its forward EV-to-EBITDA (enterprise value to earnings before interest, tax, depreciation, and amortization) multiple, which is above the peer average. The recent rise in Cenovus stock, which led to higher valuations, could be due to improving financials.

In its results for the first half of 2017, Cenovus posted positive earnings compared to a loss in the first half of 2016. It was due to a rise in oil sands operating earnings due to better realizations. Cenovus’s hydrocarbon production also rose. Its Deep Basin segment reported earnings in the first half of 2017 as a result of the completion of the acquisition of western Canadian assets from ConocoPhillips in May 2017.

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