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Goldman Sachs Starts Imperial At Neutral, Positive On 'High-Quality Assets' And Fair Valuation

Goldman Sachs Starts Imperial At Neutral, Positive On 'High-Quality Assets' And Fair Valuation

Goldman Sachs initiated coverage of Imperial Oil Limited (USA) (NYSE: IMO) at Neutral on its fairly valued current price. The move comes ahead of the Q3 earnings announcement.

Incidentally, the company's EPS failed to meet estimates in the last three quarters between 71.4 percent and 400 percent.

Analysts Neil Mehta and Kristina Cibor see slowing production growth in the near term. However, they rated the upstream asset quality higher, thus providing scope for re-rating shares up. Mehta and Cibor advised investors to have more confidence in the growth plans for the long term.

However, the brokerage is waiting for more clarity on growth as the company could gain from Kearl and Syncrude mining and in-situ assets.

"IMO has lower near-term production growth than other Canadian oils, but we believe the company can further unlock E&P value if the company proceeds with proposed in-situ projects (especially Aspen, which is expected to receive regulatory/FID approvals in 2017)," the firm said in a research note to clients.

Related Link: Credit Suisse Upgrades Imperial Oil To Outperform, Says Recent Rebalance Favors Company

Goldman thinks a planned sale of assets could boost the balance sheet, although the firm added, "[W]e take no view on the likelihood of deal closure, should it occur." The firm sees risks coming from commodity prices, refining and currency exposure.

The brokerage has a price target of C$46 on the stock, while the stock traded up 1.0 percent to $33.41 at last check.

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Latest Ratings for IMO

Jan 2021Credit SuisseMaintainsNeutral
Dec 2020Credit SuisseMaintainsNeutral
Dec 2020Morgan StanleyDowngradesEqual-WeightUnderweight

View More Analyst Ratings for IMO
View the Latest Analyst Ratings


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