Are investors and analysts expecting too much from Suncor Energy Inc.'s second-quarter results? TD Newcrest analyst Menno Hulshof seems to think so.
He cites "significant planned and unplanned downtime" in both Suncor's upstream and downstream operations as a cause for concern.
"We suspect that the Q2/11 Bloomberg consensus cash flow per share estimate of $1.33 does not capture all of this downtime. It is 20 per cent higher than our current estimate of $1.11," Mr. Hulshof wrote in a research note.
Mr. Hulshof forecast a 29 per cent drop in total production from the first quarter.
He also pointed out that Suncor does not "hedge aggressively," leaving it more exposed to volatility in oil prices .
He trimmed his target price slightly to $52 from $53, and maintained his "buy" recommendation on the energy stock.
"The outlook for the quarter aside, we continue to like Suncor for its growth potential and on the basis of relative valuation," Mr. Hulshof said.
Suncor trades at 77 per cent of its net asset value, compared with an industry average of 93 per cent.