Bullboard - Stock Discussion Forum Cenovus Energy Inc T.CVE

Alternate Symbol(s): CVE | CVE.WS | T.CVE.WT | T.CVE.PR.A | CNVEF | T.CVE.PR.B | T.CVE.PR.C | T.CVE.PR.E | T.CVE.PR.G

Energy Oil & Gas Integrated

Cenovus Energy Inc. is a Canada-based integrated energy company. The Company has oil and natural gas production operations in Canada and the Asia Pacific region, and upgrading, refining and marketing operations in Canada and the United States. The Company's segments include Upstream, Downstream, and Corporate and Eliminations. Its Upstream segment includes Oil Sands, Conventional, and Offshore.... see more

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TSX:CVE - Post Discussion

Cenovus Energy Inc > RBC

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Post by retiredcf on Sep 26, 2024 8:52am

RBC

These are USD targets and their upside scenario target is US$38.00. GLTA

September 25, 2024

RBC Dominion Securities Inc.
Greg Pardy, CFA (Head of Global Energy Research) (416) 842-7848, greg.pardy@rbccm.com
Rob Mann, CFA (Associate)
(416) 842-7915, robert.mann@rbccm.com
Justin Ho, CFA (Associate)
(416) 842-8375, justin.ho@rbccm.com

Outperform

TSX: CVE; CAD 22.94; NYSE: CVE

Cenovus Energy Inc.
Highlights from RBC Desk Presentation

Our view: Our constructive stance towards Cenovus reflects its capable leadership team, underleveraged balance sheet, and rising shareholder returns on the back of achieving its $4 billion net debt target in July —unlocking 100% payout of excess funds flow. We are maintaining an Outperform rating on Cenovus and our one-year price target of $29 per share.

Key points:

Cenovus Energy presented today to RBC Capital Markets’ Sales & Trading team, with Jon McKenzie (President & CEO), Jeff Lawson (Chief Sustainability Officer), and Evan Campbell (Investor Relations Specialist) in attendance. The discussion delved into a number of topics including Cenovus’ strategic priorities and advantages of its integrated model. Highlights from the company’s presentation are on Page 2.

Free Cash Flow. We peg Cenovus’ 2024 free cash flow at about $4.2 billion (before working capital movements, A&D, and dividends) under our base outlook (US$76 WTI, US$14.76 WCS-WTI, US$23 NYH 3-2-1) and approximately $3.8 billion under futures pricing (US$76 WTI, US$15.08 WCS-WTI, US$22 NYH 3-2-1).

Relative Valuation. Under futures pricing, Cenovus is trading at a debt- adjusted cash flow multiple of 5.0x in 2024 (vs. our Canadian major peer group avg. of 7.0x) and at a free cash flow yield of 9% in 2024 (vs. our peer group avg. of 9%). In our minds, Cenovus should trade at a modest discount valuation vis-a-vis our peer group, reflective of its capable leadership team, strong balance sheet, 100% payout of excess funds flow to shareholders and mixed downstream operating performance.

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