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Suncor (SU) stock forecast: Russia’s pain, Canada’s gain?

By Prachi Sinha

Edited by Vanessa Kintu

13:27, 25 February 2022

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A Canada-based company in the energy sector, Suncor Energy (SU) specialises in producing oil from oil sands. It has varied operations in the oil and gas industrial sector, which it carries out through its facilities across Canada and parts of the US.

With a global team of over 30,000 people, Suncor aims to become Canada’s leading energy company. Adhering to strong environment, social and governance standards (ESG), Suncor aims to grow its business through a portfolio of low greenhouse-gas fuels, electricity and hydrogen.

Benefiting from a merger in 2009, Suncor used Petro-Canada to strengthen its retail distribution network. It also owns Suncor’s Electric Highway network that provides fast-charging stations for electric vehicles.

With an aim to reach carbon neutrality by 2050, the company has committed to investing in new technologies that can reduce its greenhouse gas fuels (GHG) footprint.

Suncor’s 6 strategic objectives

On 2 February 2022, the company released its Q4 2021 financial results. The earnings per share (EPS) missed Zacks’ consensus estimate of $0.90 by $0.01 and reported $0.89 EPS for the quarter. A day after the results were posted, the SU stock dropped by nearly 4%, from $30.40 on 2 February 2022 to $29.22 3 February 2022.

In 2021, Suncor’s stock value increased by approximately 35%, from $18.48 on 8 January 2021 to closing the year at $25.03. Can it exceed this growth in 2022 and does it make sense to invest in Suncor energy? Join us as we undertake Suncor stock analysis and get analysts’ insights.

Suncor stock fundamental analysis

In its Q4 2021 financial results, Suncor reported adjusted operating earnings of $1.29bn ($0.89 per common share). In Q4 2020, with Covid-19 adversely affecting transport fuel demand, Suncor had published adjusted operating losses of $109m. The recovery on a year-on-year (YoY) basis has been strong, with economies reopening and returning to pre-pandemic operating levels.

A key metric of Suncor’s financial performance remains its production, which is measured by barrels of oil equivalent per day (boe/d). Out of its three reportable segments of exploration and production, bitumen and synthetic crude oil (SCO), a YoY increase was only seen in its synthetic crude oil production segment. From 514,300 barrels in Q4 2020, the company’s SCO production increased by 0.13% to 515,000 barrels in Q4 2021.

Suncor’s exploration and production (E&P) assets reflected a double-digit drop from the previous year’s same quarter. In Q4 2020, 97.7 boe/d were attributable to the E&P assets, which dropped to 77.4 boe/d in Q4 2021 depicting a fall of 20.77%.

Quarter production comparison

Suncor remained committed to strengthening its balance sheet and paying back a major chunk of its debt obligations in 2021. At its highest annual debt reduction pace, the company brought down its debt to $16.1bn. By executing debt payments of nearly $3.7bn in 2021, Suncor is back to its 2019 pre-pandemic net debt levels.

In all of 2021, the company reported shareholder returns of $3.9bn, through its share repurchases and dividend payments of $2.3bn and $1.6bn, respectively. In Q4 2021 alone, Suncor paid $607m in dividends, resulting in a $0.42 dividend per share.

Suncor stock news

The company had an unfortunate start to 2022. On 6 January, one of the company’s workers died due to a collision between two heavy-haul trucks going up a mine ramp at their Base plant in Alberta’s oil sands.

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In its 18 January press release, the company acknowledged its operational issues and confirmed two other such fatalities that happened in the last month of 2020, one at the Syncrude mine and the other at the Firebag operation.

Suncor’s CEO Mark Little on his quarterly analyst conference call said:

“As CEO, the accountability for safety and operational excellence is with me, period. I own this.”

He further said the company is set to put corrective actions in place within the course of the next 18 to 24 months. Typical to the mining industry, the company is looking to bring new technology to the Canadian oil sands through mobile equipment which could help avoid such collisions.

As tensions rise between Russia and Ukraine, oil producers such as Suncor are touted to gain significant financial benefits. With the economies reopening after the pandemic, the demand for oil has been climbing. In 2020, Russia was the third-largest producer of petroleum and Europe served as its primary export spot for oil and natural gases. 

According to The Motley Fool, with Canada owning 9.8% of the world’s oil reserves, it could benefit from the strained oil supply while demand rises. Suncor stock has climbed 15% already this year, from $25.70 on 3 January 2022 to $28.93 on 25 February, and could rally further following the Russian invasion of Ukraine and possible bans on Russian oil imports.

SU 5-year stock price chart

Suncor stock predictions

According to algorithmic forecaster Wallet Investor, at the time of writing on 25 February 2022, its Suncor share price forecast suggested the price could potentially close at $25.556 by December 2022 and the Suncor stock price target could fall into the range of $13.142 to $13.757 in December 2025. 

Based on the data compiled by Tip Ranks at the time of writing, out of 13 analysts, 0 rated the SU stock as buy and 3 recommended a hold. Their consensus 12-month Suncor stock projections target was $34.54 per share, the stock price projection varying from the low of $29.83 to the high of $41.60. The current analyst price target consensus had an upside of 19.39%, based on the close price of $28.93 on 24 February 2022.

Several equities analysts have issued research reports about Suncor stock in February 2022. Tudor Pickering downgraded Suncor’s stock rating from a buy to hold and set its price target at $42 on 4 February 2022. On 5 January, Wells Fargo & Company upgraded its rating of Suncor Energy shares from equal weight to overweight.

Milan Vaishnav, CMT, MSTA, a consulting technical analyst at Gemstone Equity Research & Advisory Services, shared his technical opinion on Suncor share value: 

“SU stock is in a firm uptrend. However, on the daily chart, it appears to be taking some breather after it tested the high point of $30.51. On the weekly charts, it has a major classical double-top resistance at $31.70. This makes the zone of $30.50 to $31.70 a very strong resistance zone for the stock. If one is contemplating any fresh purchase in this stock, then the fresh purchase should be made only above $31.70. Until then, no fresh entry is advised. The Relative Strength Index (RSI) shows a bearish divergence against the price.”

When looking for Suncor earnings forecasts it’s important to bear in mind that analysts’ forecasts and price targets can be wrong. Analysts’ SU stock forecasts are based on making fundamental and technical studies of the stock’s performance. Past performance is no guarantee of future results.

FAQs

Is SU stock a good buy?

According to Tip Ranks, 10 analysts have given this stock a buy recommendation and three have maintained a hold. On 2 February 2022 the company released its Q4 and full-year 2021 financial results. The earnings recovery, on a YoY basis, has been strong, with economies reopening and returning to pre-pandemic operating levels.

However, whether Suncor stock is a suitable investment depends on your own investment objectives. You should conduct your own research and then make a decision regarding Suncor future stock outlook. It’s important to reach your own conclusion on a company’s prospects and the likelihood of achieving analysts’ targets.

Will the Suncor stock go down?

According to an algorithm-based application Wallet Investor, the share price for Suncor stock could go as low as $13.142 by December 2025. However, analysts’ forecasts can be wrong and have been inaccurate in the past. Always do your own research before investing in a company’s stock and never invest money that you cannot afford to lose.

Markets in this article

SU
Suncor Energy
38.59 USD
-0.3 -0.770%

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