Raymond James has adjusted its price target on Imperial Oil Ltd. to C$107.00 from C$106.00 yet left its recommendation unchanged at Underperform. The firm highlighted valuation concerns despite the slight increase to the target.
As noted by the analyst, Imperial Oil's stock is trading at approximately $101.67, broadly in line with InvestingPro’s Fair Value estimate, but technical indicators point to overbought conditions. Raymond James emphasizes that the stock remains expensive on both an absolute basis and relative to its peers, with the share price sitting roughly 21% above the firm’s target.
The broker also points out that Imperial Oil is trading near its 52-week high of $106.64, and that the stock has delivered total returns of 51.86% over the last 12 months. In the view of Raymond James, the company posts some of the lowest free cash flow yields within its peer group. Specifically, fiscal year 2026 estimates show a sustaining free cash flow yield of 6.1% and an approximate free cash flow yield of 5.0%.
Raymond James expects Imperial Oil’s proportional shareholder return in fiscal year 2026 to be materially lower than that of other large-cap peers. The firm does not see any material operational catalysts through the near term, noting that a potential final investment decision tied to an EBRT-related project could occur later this decade but is not an immediate driver.
While the analyst acknowledges strengths in Imperial Oil’s business model - including low breakevens, a long reserve life and a strong balance sheet - the conclusion is that more attractive investment opportunities exist within Raymond James’ coverage universe at current valuations.
Market metrics cited in the analysis show Imperial Oil trading at a price-to-earnings ratio of 17.64. The company also has a long record of returning cash to shareholders, having paid dividends for 35 consecutive years.
Imperial Oil’s latest quarterly report for fourth-quarter 2025 delivered a mixed picture. The company reported earnings per share of $1.97, beating the forecast of $1.94, a 1.55% positive surprise. However, revenue missed expectations, coming in at $11.28 billion versus the anticipated $12.59 billion, a shortfall of 10.41%.
Those results suggest Imperial Oil managed costs effectively enough to post an EPS beat, while revenue performance lagged market expectations. The combination of a modest earnings surprise and a notable revenue miss leaves room for differing interpretations by analysts and investors evaluating the firm’s near-term outlook and valuation.
Overall, Raymond James’ move to raise the target by C$1 while maintaining an Underperform rating underscores the firm’s continued concern about Imperial Oil’s valuation and relative return potential despite some operational strengths and a recent earnings beat.