Suncor Energy (SU) posted a "strong operational/financial quarter" with production exceeding expectations, mainly due to better performance at Grand Banks and significant contribution from the downstream segment, RBC Capital Markets said in a note emailed Thursday.
The company reaffirmed its 2025 production guidance with a midpoint of 825,000 barrels per day, under a 6.2 billion Canadian dollars ($4.45 billion) capital expenditure plan, according to the note.
The firm said Suncor's financials remain clean despite a slight increase in net debt and the company is returning nearly all of its excess free fund flow after dividends through share buybacks.
"We believe the company should trade at an average/above-average valuation vis-a-vis our global major peer group given its physical integration, impressive upstream-downstream operating performance, free cash flow generation, solid balance sheet and ample shareholder returns," RBC added.
The firm reaffirmed the outperform rating on Suncor's stock with a CA$65 price target.
Price: 34.16, Change: +0.20, Percent Change: +0.57
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