Cenovus Stock Forecast: Following OPEC Deal

The article was written by Blair Goldenberg, a Financial Analyst at I Know First, and enrolled in a Masters of Finance at Colorado State University.

Cenovus Stock Forecast


  • Background on Cenovus Energy Inc.
  • Cenovus Stock Forecast
    • Cenovus Energy Inc. Has More Gas After Reaching 52-Week High
  • Analysts Recommendations
  • I Know First Cenovus Stock Forecast

Background on Cenovus Energy Inc.


Cenovus Energy Inc. is an integrated oil company headquartered in Calgary, Alberta. Cenovus was formed on December 1, 2009 when Encana Corporation split into two distinct companies, with Cenovus becoming a focused integrated oil company. Some of Cenovus’s assets formerly belonged to PanCanadian Energy Corp. and Alberta Energy Company (AEC), the two Canadian oil and gas companies that merged to form Encana in 2002. Cenovus is known for being a responsible developer of Canada’s oil sands, with an emphasis on innovation, safety and environmental stewardship. The company’s business strategy focuses on creating value through the development its oil sands assets, achieving predictable, reliable performance and maintaining financial resilience. Cenovus shares trade on the Toronto and New York stock exchanges under the symbol CVE.

Cenovus Stock Forecast

The average EPS for CVE is $17.91, while Zack’s have set the price at $23. It’s also estimated that this year, CVE stock will decrease by $15. Meanwhile, Scotiabank has raised it’s EPS from $20 t0 $21. At the end of November, CVE gained 9.55% in one day. On November 30, 2016, CVE ended at $20.77 share price, with a market cap of 17.31 billion.

Interestingly, Canadian banks have a higher EPS and have higher ratings for the energy company. For example, Royal Bank Of Canada gave CVE an outperform rating and set their target price at $23.00 while, JPMorgan Chase & Co. had a target price of $19, compared to their earlier EPS of $18.

CVE volume on oil sands has grown 5% from this time of last year and their total operating costs for oil declined 14% per barrel. Also, operating costs on general and administrative costs have been reduced by $500 million yearly. This year CVE has reached production of 74,000 barrels per day of oil sands at their Foster Creek facility, a 3% increase since last year’s Q3. At their Christina Lake facility, they reached almost 80,000 barrels per day, which is a 6% increase from the same quarter last year. CVE came out of Q3 with $8 billion in liquidity and their net debt to capitalization currently stands at 17%.

Cenovus Stock Forecast

OPEC (Organization of the Petroleum Exporting Countries) cut its production on oil last Wednesday, causing many oil companies to benefit heavily. Because of the recent cuts in oil production, supply is limited, however, demand stays the same. When this happens, companies have the ability to raise prices in order to make more money. Supply is low, demand is high, so companies that require oil pay more regardless of how much the oil costs.

The benefit to oil increase for the oil companies is that almost every industry runs on some sort of oil. It’s still a necessity around the world. So while oil companies rake in money, other companies have to compensate for the price increase which usually means that every day products will end up going up a bit. On Wednesday alone, oil prices went up 10% which is the highest it has been in a month. A third of the world’s oil is produced by OPEC which is about 33.6 million barrels per day. After the deal on Wednesday, OPEC would reduce output by 1.2 million barrels per day starting in January.

CVE is one of the many companies to benefit from the OPEC deal. Before the deal, CVE was down 14% due to a decrease in oil prices for the last year. Because of this, CVE had to cut back on capital expenditures. CVE has $3.9 billion of cash on its balance sheet, which means that the company has the capital to invest in new projects. Now that the deal has gone through, CVE can continue on with their plans to expand the Christina Lake facility.


Cenovus Energy Inc. Has More Gas After Reaching 52-Week High

Analyst Louis Casey from Frisco Fastball posed the question, “does Cenovus Energy Inc Have More Gas After Reaching 52-Week High?” Now that the OPEC deal has been accepted and will be adopted next month, it is clear that Cenovus does have more gas, literally and figuratively. The deal allows them to continue old projects as well as begin new ones which will lead to more funds for their future projects, thus increasing their capacity for oil.

Analysts Recommendation 


Currently, CVE has a hold rating but because of the OPEC deal, right now would be the perfect time to buy shares. The deal will ultimately increase oil prices which will affect the share price positively in the short and long term. Before January, when the deal will be in effect, the share price will be more attractive and will more likely raise as the oil becomes more expensive.

I Know First Cenovus Stock Forecast


The I Know First Algorithm is bullish in the short term and in the long term on CVE.

In the past I Know First Algorithm has been bullish on CVE.

The algorithm correctly forecasted CVE stock movement 07/25/2016 – 10/25/2016 with an increase of 8.41% in the period.

This bullish Cenovus Stock Forecast was sent to I Know First’s current subscribers on July 25th, 2016

How to interpret this diagram:


This indicator represents the predicted movement/trend of the asset; not a percentage or specific target price. The signal strength indicates how much the current price deviates from what the system considers an equilibrium or “fair” price.

Predictability (P)

This value is obtained by calculating the average correlation coefficient between the past predictions and the actual asset movement for three discrete time periods. The averaging gives more weight to more recent performances. As the machine keeps learning, the values of P generally increase.