Analysts Shift Gears: Suncor and Imperial Oil Upgraded, CNQ Downgraded

In a surprising shift, TPH & Co. has downgraded Canadian Natural Resources (CNQ.TO) from “buy” to “hold” while boosting both Suncor Energy (SU.TO) and Imperial Oil (IMO.TO) to “buy.” This adjustment reflects growing concerns about valuation for CNQ and a more bullish outlook on Suncor and Imperial amid looming U.S. tariff risks on Canadian crude.

Analyst Jeoffrey Lambujon, who spearheaded the revisions, maintained his $50 per share price target on CNQ. While acknowledging the company’s world-class asset quality and execution, he believes the stock’s valuation has become stretched, making better opportunities available elsewhere. Though CNQ has consistently delivered strong financial results, Lambujon views the recent market weakness as temporary rather than a deeper structural issue. That said, he believes Suncor and Imperial present a more compelling rate of change in their valuation.

Suncor’s Ascent Under CEO Rich Kruger

Suncor has been on an upward trajectory, benefiting from strong financials and renewed confidence under CEO Rich Kruger. Since taking over in 2023, Kruger has aggressively cut costs, improved safety standards, and reduced downtime, leading to significant improvements in operations. This disciplined approach has solidified Suncor’s standing as the best-positioned Canadian oil company to weather a potential trade war with the United States.

Lambujon sees these developments as a game-changer, stating that Suncor has transformed from a scrappy underdog into a dominant market force. The firm has now raised its price target for Suncor to $66 per share, reflecting growing optimism around the company’s ability to navigate industry headwinds while continuing to improve efficiency.

Imperial Oil Gains Favor Amid Tariff Risks

Imperial Oil has also seen a sentiment shift, with TPH & Co. upgrading the stock to “buy” and setting a new price target of $115 per share. The firm pointed to Imperial’s long history of strong operational execution and its resilience against external risks as key reasons for the improved outlook. Lambujon emphasized that Imperial’s substantial issuer bid potential and robust refining and fuel marketing business in Canada make it a safer bet, particularly in an uncertain trade environment.

As the energy sector braces for potential tariffs from the U.S., Imperial’s ability to operate independently within Canada gives it a strategic edge. With a well-established track record of performance, the company is increasingly viewed as one of the sector’s most reliable players.

Market Response and Outlook

Following the analyst upgrades, Suncor shares saw an immediate jump, climbing as much as 2.5%. Meanwhile, shares of Canadian Natural Resources and Imperial Oil registered smaller gains of less than one percent during mid-day trading.

This latest re-evaluation underscores a shifting dynamic in the Canadian oil and gas sector. While Canadian Natural Resources remains a high-quality player, concerns over valuation have left it on the sidelines for now. In contrast, Suncor and Imperial are emerging as top picks for investors looking to navigate the complex energy landscape. With strong fundamentals and a clearer path forward, both companies are poised to benefit from changing market conditions in the months ahead.