PKIUF - Imperial Oil upped to Buy at Goldman as underappreciated capital return story

Imperial Oil (IMO +3.9%) jumps to the highest in more than seven years after Goldman Sachs upgrades shares to Buy from Neutral as part of a generally favorable outlook on Canadian producers, citing several factors including strong free cash flow and improving pipeline egress. Goldman analyst Neil Mehta says the Imperial Oil upgrade reflects sustained operational improvement at Kearl, and leverage to the oil price recovery and improved fundamentals for Western Canada Select which should drive substantial free cash flow generation. Mehta's favorite Canadian oil name is Buy-rated Cenovus Energy (CVE +3.4%), citing the company's "management turnaround, oil price leverage and deleveraging/capital potential." The firm also downgrades Parkland (OTCPK:PKIUF) to Neutral from Buy, saying rising crude prices could compress retail margins, and its M&A focused strategy will constrain competitive capital returns. Imperial Oil recently reported better than forecast Q4 earnings and accelerated stock buybacks.

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Imperial Oil upped to Buy at Goldman as underappreciated capital return story