This Analyst Downgrades Imperial Oil, Slashes Price Target On Gloomy Commodity Outlook - Imperial Oil (AMEX:IMO)

RBC Capital analyst Greg Pardy has downgraded Imperial Oil Ltd IMO to Sector Perform from Outperform and cut the price target to C$78 from C$82 following the updated Global Energy Research commodity Price outlook.
The analyst still believes in Imperial Oil's efficient leadership team, impressive operating performance, long-life-low-decline upstream portfolio, strong balance sheet, and commitment to shareholder returns.
Pardy projects net production at 75,500 bbl/d (86% utilization rate) in Q1 2023, with expected upstream production of 413,400 boe/d.
He expects capital spending of C$413 million and net debt of C$643 million (including net working capital).
The analyst projects operating cash flow at C$1.5 billion, with FCF (before dividends and working capital movements) of C$1.1 billion.
IMO trades at a debt-adjusted cash flow multiple of 5.5x and a free cash flow yield of 14% of 2023 estimates.
The bull case price target of C$94 reflects a 60% weightage toward a multiple of 1.3x of upside NAV and a 40% weightage toward a 2023 estimated mid-cycle debt-adjusted cash flow multiple of 8.7x.
The bear case price target of C$40 reflects a 60% weightage toward a multiple of 0.7x of downside NAV and a 40% weightage toward a 2023 estimated mid-cycle debt-adjusted cash flow multiple of 5.7x.
Price Action: IMO shares are trading higher by 1.75% $55.70 on the last check Wednesday.