Suncor Energy shares are up 26.5% YTD. Here’s the next target for buyers

Written by: Stanko Iliev
March 5, 2021
  • Suncor Energy shares have advanced more than 26% since the beginning of January
  • Bank of America sees more room for rising
  • If the price jumps above $25, the next target could be around $27.5 or even $30

Suncor Energy (NYSE: SU) shares have advanced more than 26% since the beginning of January, while Bank of America sees more room for rising. The U.S. economy created more jobs than expected in February, but the U.S. stock market remains under pressure, and the risk of further decline is not over.

Fundamental analysis: Suncor Energy could deliver strong shareholder value for many years to come

Suncor Energy shares are advancing this trading week, and at the current stock price, this company is fairly valued, in my opinion. Suncor Energy reported Q4 results in February; total revenue has decreased by -29.3% Y/Y while Q4 GAAP EPS was -C$0.11 (beats by C$0.03).

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Crude oil and refined product realizations in Q4 were significantly lower than a year ago, mainly due to the continued impact of the Covid-19 pandemic. Suncor Energy is still preparing for a safe and staged return to normal operations, and as more people get vaccinated, economic activities will start to recover.

“The economy is still going through the transition from the virus to the vaccine, and it is a bit rougher than you would like,” said Steven Ricchiuto, U.S. chief economist at Mizuho Securities USA in New York.

Suncor Energy continues to invest in projects to drive increased cash flow, and according to estimates, these new projects could generate $400 million of incremental free funds flow in the 2021 fiscal year.

“I’m confident in the value that our cogen and wind investments will add to Suncor’s annual free fund’s flow and the long-term value to our shareholders, while also making some material steps in addressing our greenhouse gas emissions. Continuing to prudently invest in these types of projects strengthens Suncor’s in an increasingly volatile environment,” said Mark Little, President, and Chief Executive Officer.

The positive fact is that the Q4 loss was lower than expected, and the company announced that it would pay around $1.2B of debt and buy back $400M-$800M of shares in 2021. According to the latest news, the company will sell its 26.7% share in the Golden Eagle Area Development to EnQuest for $325M.

Suncor Energy’s 3% dividend looks safe, and according to the company’s management, cash flow will cover the dividend even if things get worse. Suncor Energy could deliver strong shareholder value for many years to come, and according to the Bank of America, shares of this company could advance even more.

Technical analysis: $25 represents a strong resistance level

Data source: tradingview.com

Suncor Energy shares have advanced from $16.5 above $22.3 since the beginning of January, and the current price stands around $22. The critical support levels are $20, $17.5 and $15; $25, $27.5 and $30 represent the important resistance levels.

If the price jumps above $25, it would be a signal to trade shares, and the next target could be around $27.5, but if the price falls below the $17.5 support level, it would be a firm “sell” signal.

Summary

Suncor Energy shares have advanced more than 26% since the beginning of January, while Bank of America sees more room for rising. Suncor Energy reported Q4 results in February, revenues fell more than 29%, but this was mainly due to the covid pandemic.