Analyst Note| Dave Meats, CFA |
We are increasing our fair value estimate for no-moat Imperial Oil to $25/CAD 32 from $24/CAD 30. Our higher fair value estimate is driven by increased near-term commodity price forecasts. We are also maintaining our no-moat rating. The stock is trading near $22/CAD 28, which implies only modest upside to our fair value estimate. Imperial also offers a 3.2% dividend yield, but this lags Canadian Natural Resources. We see better opportunities in the Canadian energy sector, specifically Enbridge, Cenovus Energy, and Canadian Natural. We think the market is appropriately recognizing Imperial’s growth potential and strong balance sheet.