Analyst Michael Shaw boosted his outlook to $53 from $50 in a note to clients on Tuesday, calling for Suncor to benefit from "the macro tailwinds behind its best-in-class downstream assets." If he's correct, that will see shares retrace their current 52-week high of $53.62 achieved in June, prior to this summer's decline in crude prices (CL=F).
Toronto-listed shares were little changed in Tuesday's session, trading essentially flat at $48.82 as at 11:20 a.m. ET. The stock has climbed nearly 48 per cent year-to-date.
However, Suncor's performance has lagged Calgary-based peers like Cenovus Energy (CVE.TO)(CVE) and Imperial Oil (IMO.TO)(IMO) over many months of strong commodity prices, a point raised by an activist investor in a public letter earlier this year.
Shaw's upward price target revision comes three weeks ahead of Suncor's investor day, where executives are expected to spell out a 36-month turnaround plan for Fort Hills, an asset plagued by missed production targets and safety issues.
Suncor has faced pressure from New York-based Elliott Investment Management to improve its "unacceptable" safety record, following a string of worker deaths that ultimately led to Mark Little departing as chief executive officer in July.
Elliott has also prompted Suncor to review the sale of its Petro-Canada gas station chain. The company says it will present the results of its review at its Nov. 29 investor day.
Last week, Suncor said it would cut its contractor work force by 20 per cent under its plan to improve safety. Interim CEO Kris Smith says the company is also deploying collision prevention technology and fatigue management systems across its mines.
"We applaud the steps taken to improve [Suncor's] safety record discussed on the conference call, but reiterate our view that this process will take time as the issues are likely deeply entrenched," Shaw wrote on Tuesday, noting investment in technology and fewer contractors "will almost certainly imply higher costs."
Suncor reported third-quarter financial results last Wednesday, booking a $609 million net loss largely due to a $3.4 billion writedown against its share of Fort Hills. Last month, the company announced it reached a deal to buy Teck Resources' (TECK-B.TO)(TECK) 21.3 per cent ownership of Fort Hills for $1 billion.
Suncor says its downstream business, which includes four refineries in the U.S. and Canada, was a point of strength in the three months ended Sept. 30. The company touted strong margins, and a 100 per cent utilization rate in the quarter.
Jeff Lagerquist is a senior reporter at Yahoo Finance Canada. Follow him on Twitter @jefflagerquist.