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(Idea) Cenovus Energy - Better Days Ahead
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(Idea) Cenovus Energy - Better Days Ahead

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HFI Research
Nov 06, 2024
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Ideas from HFI Research
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(Idea) Cenovus Energy - Better Days Ahead
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By: Jon Costello

Note: Dollar references are to Canadian dollars unless otherwise specified.

Cenovus Energy’s (CVE) third-quarter results followed the same pattern as the last few reports, namely, strong upstream performance that was overshadowed by a poor showing for downstream.

Investors are understandably frustrated at the lack of operational progress. Nevertheless, I believe it would be a mistake for long-term CVE investors to sell their shares. Assuming that management can improve the company's downstream performance, CVE's current share price fails to reflect its extraordinary cash flow prospects for 2026 and beyond.

The cash flow could be enough to cause the shares to appreciate by more than 70% in 2026 from current levels.

Given the upside potential, the best course for shareholders at the moment is to remain patient as cash flow improves in 2025 and then inflects significantly higher in 2026.

An Underwhelming Third Quarter

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