Analyst ratings for Cenovus
In the previous part, we studied analyst ratings for Chevron (CVX). Now, in this part, we’ll review analyst ratings for Cenovus Energy (CVE). Cenovus is a Canadian integrated energy company. It has oil sands, deep basin, and refining and marketing business segments. The company’s market cap of around $12 billion ranks it the second-smallest among the ten integrated energy companies being discussed in this series.
The analyst rating graph above shows that seven out of the 14 analysts covering CVE have rated it a “buy” in December 2017. Another six analysts have rated CVE as a “hold.” The remaining one analyst has rated CVE as a “sell.” CVE’s peers with even lower “buy” ratings include Petrobras (PBR), ExxonMobil (XOM), and Total (TOT). PBR, XOM, and TOT have been rated as a “buy” by 47%, 31%, and 17% of analysts, respectively.
Changes in mean target price
Compared to December 2016, analyst ratings for CVE have changed. In December 2016, CVE had less “buy” ratings and more “hold” ratings. During the same period, CVE’s mean target price has fallen 35% to 14.3 Canadian dollars (or $11.2) per share. The mean target price implies a ~17% gain from the current level. The implied gains have expanded as the decline in Cenovus stock price of 39% was steeper than the decline in its mean target price of 35%. Also, Cenovus stock price has fallen 3.9% in the current quarter since October 2.
Cenovus currently trades above the average peer forward PE. Cenovus also trades at 8.3x its forward EV-to-EBITDA, above the peer average. Cenovus’s higher valuations could be due to improving financials.
In its results for the first nine months of 2017, Cenovus posted positive earnings compared to a loss in the corresponding period in 2016. This was due to a rise in oil sands operating earnings due to better realizations. Plus, Cenovus’s hydrocarbon production also rose. Also, its Deep Basin segment reported earnings in the first nine months of 2017. This was a result of the completion of the acquisition of Western Canadian assets from ConocoPhillips in May 2017.