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Highlights

  • Desjardins cuts MEG Energy rating from hold to tender on Monday.
  • Brokerage maintains CAD 28.00 price target on the Alberta-based producer.
  • Company announces quarterly dividend increase to CAD 0.11 per share.

Desjardins downgraded shares of MEG Energy (TSE: MEG) from a “hold” rating to a “tender” rating in a research note issued to investors on Monday, according to BayStreet.CA. Alongside the revised rating, the brokerage set a price target of CAD 28.00 for the stock.

MEG Energy is focused on in situ oil sands development and production in Alberta, Canada. As of March 2021, the company reported estimated net proved and probable reserves of approximately 2 billion barrels of oil equivalent. In 2020, its net production averaged 82,000 barrels per day, underscoring its role as a significant producer within Canada’s energy sector.

The downgrade reflects Desjardins’ updated outlook, although the investment bank did not provide further detail on the rationale behind the tender rating in its report. The price target of CAD 28.00 indicates the firm’s valuation expectations in the current market environment.

On the shareholder returns front, MEG Energy recently announced an increase in its quarterly dividend. The company declared a dividend of CAD 0.11 per share, payable on Wednesday, October 15th, to investors on record as of Friday, September 12th. This represents a modest increase from the previous quarterly dividend of CAD 0.10 per share. The updated payout equates to CAD 0.44 on an annualized basis and a dividend yield of about 1.6%. MEG Energy’s dividend payout ratio currently stands at 21.19%, which indicates that a portion of earnings is being returned to shareholders while leaving room for reinvestment in operations.

The updated rating from Desjardins comes at a time when oil sands producers are facing evolving market conditions, influenced by commodity price trends, global demand recovery, and environmental policy developments. MEG Energy’s sizeable reserve base and established production levels remain notable features, but the tender rating suggests the brokerage sees limited near-term upside potential relative to its valuation framework.