Imperial Oil cut to Peer Perform at Wolfe Research on higher capex

Wolfe Research downgraded Imperial Oil (IMO) to Peer Perform from Outperform. The firm notes that the shares are moderately undervalued, though it also believes that the route to market recognition of value was driven by outsize dividend growth, which has underpinned Imperial’s strong outperformance for most of the last three years. With guidance provided in December, spending and long term maintenance capital both increased, but refining weakness is a headwind that implies sustaining the same pace of dividend growth is unlikely, the analyst tells investors in a research note.