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On Wednesday, JPMorgan downgraded Gibson Energy (TSX:GEI:CN) (OTC: GBNXF) stock from Neutral to Underweight, adjusting the price target to Cdn$23.00 from the previous Cdn$26.00. The downgrade follows Gibson Energy’s fourth-quarter 2024 performance, which fell short of expectations, with adjusted EBITDA reported at $130 million compared to the Street’s median estimate of $152 million.
The company’s Marketing segment struggled due to tighter crude differentials and crack spreads, increased demand for Canadian heavy oil leading to steep backwardation, and fewer opportunities based on market volatility. Despite prior guidance suggesting the Marketing segment would perform at or below the $80-120 million framework, the full-year results significantly underperformed, raising concerns about the company’s future outlook.
The Infrastructure segment also underperformed, despite strong volumes at the Gateway and Edmonton Terminal. The report indicated no significant new developments, and market watchers are now looking forward to insights from the newly appointed CFO Riley Hicks, who previously served as Senior VP of Corporate Development and Marketing Strategy.
JPMorgan’s analysis suggests that the substantial earnings miss could greatly undermine investor confidence in Gibson Energy, potentially placing the company in a position where it will need to prove itself to regain market trust. The firm’s new lower price target reflects the challenges faced by Gibson Energy and the revised expectations for the company’s financial performance moving forward.
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