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Canadian Natural Resources (CNQ.TO)(CNQ) shares were downgraded by TPH & Co. on Monday. At the same time, the Houston-based research firm joins a growing camp of analysts favouring Suncor Energy (SU.TO)(SU) and Imperial Oil (IMO.TO)(IMO) amid the risk of U.S. tariffs on Canadian crude.
Analyst Jeoffrey Lambujon cites valuation concerns as he lowered his recommendation on Canadian Natural Resources’ stock from “buy” to “hold,” while maintaining a $50 per share price target. He upgraded Suncor and Imperial from “hold” to “buy” on Monday, with price targets at $66 and $115 per share, respectively.
“While we view CNQ’s asset quality and reliable execution as world-class, and see recent weakness as more noise-related versus structural, we’re moving to the sidelines on valuation,” he wrote in a note to clients.
“Looking ahead, we don’t doubt CNQ’s ability to continue crushing the quarters, and 2025 could bring further operational improvement following recent transactions (all positive, in our view), but for now, we see better rate-of-change potential elsewhere among Canadian seniors.”
Suncor shares have climbed since the company reported fourth-quarter and year-end 2024 financial results last week. CEO Rich Kruger says Suncor is the best-positioned in Canada’s oil and gas sector to withstand a trade war involving oil with the United States.
Kruger also boasted on a conference call with analysts that Suncor has hit several internal milestones earlier than expected under his push to improve safety, cut costs, and limit downtime since becoming CEO in 2023.
“From scrappy underdog to league MVP, reflecting multi-year track record of execution and accelerated progress on major strategic targets,” Lambujon wrote of Suncor.
Owing to their respective refining and fuel marketing businesses in Canada, Suncor and Imperial have been praised by analysts covering the sector since U.S. President Donald Trump began threatening levies on imported oil and gas.
On Imperial, Lambujon notes that “[a] long history of high-calibre operational execution, fresh [substantial issuer bid] trigger potential, and a safety net from tariff risks turn us more bullish.”
Toronto-listed Canadian Natural Resources, Imperial Oil, and Suncor shares all closed between one and two per cent higher on Monday.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.
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