CVE:CC - Five large-cap Energy stocks for 2024 - Goldman

2023-12-15 10:39:55 ET

Goldman Sachs presented five large-cap energy ( NYSEARCA: XLE ) stocks that could have the potential for mean reversion and turnaround in 2024.

In its Americas Energy report, published on Friday, Goldman analysts named Chevron Corporation ( CVX ), Cenovus Energy ( CVE ), Devon Energy ( DVN ), SLB ( SLB ), and Kinder Morgan ( KMI ) as companies that could succeed in a mid-cycle environment with $80 a barrel for Brent ( BNO ), ( CO1:COM ), ( SPGSBR ) and $3.5 per one million British thermal units (or MMBtu) Henry Hub Natural Gas Spot Price.

These companies have shown significant differentiation in performance across sub-sectors, analysts said.

• Chevron Corp. ( CVX ) - 20% upside to $180 price target. Goldman analysts expect the company to turnaround its underperformance and gain about $29B in buybacks and dividends, for a 10% yield.
• Cenovus Energy ( CVE ) - 38% upside to $23 price target. Analysts said they are confident the company would increase shareholder returns in the second half of 2024. “Key refining assets are now online, most notably Toledo with 128 KBPD (a thousand barrels per day) of throughput expected in 2024, driving further cash flow inflection; and broader integration opportunities.”
• Devon Energy ( DVN ) - 13% upside to $51 price target. Analysts believe the company will regain operational momentum through capital spending and production execution.
• SLB ( SLB ) - 24% upside to $65 price target. Analysts said that “at the current price, the stock is fundamentally undervalued as international rig count still remains below pre-Covid levels, offshore activity outlook has remained resilient and SLB continues to expand its digital business.”
• Kinder Morgan ( KMI ) - 19% upside to $21 price target. The company is expected to outperform its peers in 2024 after negative headwinds - such as the natural gas business and its balance sheet - are removed. “We expect improving base business performance, as well as potential contributions from the $1.8B of pending acquisitions, allow room for solid quarterly execution and support a positive rate of change for investor sentiment.”

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