Suncor Buy Rating Reiterated by TPH, Target Price Raised $42 11:07 AM EST, 01/13/2022 (MT Newswires) -- Tudor, Pickering and Holt on Thursday reiterated its buy rating on the shares of Suncor Energy (SU.TO) and raised its target price to C$42.00 from C$39.00 ahead of fourth-quarter results from the Canada's largest oil producer and refiner.
"Our updated model ahead of the quarter has our free cash flow estimate trending lower as weaker forecast capture rates in refining and a late quarter cold snap in western Canada has us revising our oil sands production forecasts lower." analyst Matt Murphy said in a note. "For the quarter, we forecast cash flow of C$2.13/shr vs. recent Street estimates in the C$2.32/shr range, with production volumes estimated at 754mbpd vs. Street estimates in the 795mbpd range.
Relative to our prior estimates, the key moving pieces include lower Syncrude production (187mbpd net to SU) and Firebag production (196mbpd), though we forecast a solid quarter at Base Mine as an offset from a realization perspective. In the downstream, while we forecast a solid quarter on the operational front at 95% utilization, we bake in weaker capture rates relative to our prior modeling, driving our cash flow forecast of ~C$800MM vs. Q3'21 in the C$950MM range.
Lastly, owing to an estimated increase in sustaining-related capital to wrap-up the year, we model higher capital relative to our prior forecasts at C$1.125B (Street C$970MM) to conclude the year in the C$4.4B range."