New York, October 6 (FinanceEnquiry.com) – Analyst Stephen Richardson at Deutsche Bank Securities downgrades rating on the shares of Encana Corporation (NYSE: ECA) HOLD to SELL. The 12-month target price is set to CAD20.
In a research note published on October 4, the analyst mentions that it has been grappling to give details relative value in something that is examined as a delaying capital effectiveness story with challenged underlying production trends despite the fact that YTD performance (+23 percent) at the company has been clarified by the bounce in NG and ameliorating gas balances of the upcoming year.
Also, a more choosy approach to the stocks is suggested being CAL13 above the estimations at present. Given a mix shift and local realizations of gas, a pessimistic inflection point in the revisions cycle that has aided the stock YTD is observed at Encana Corporation. In addition to this, the equal-weighted ascription of a target EV/DACF multiple (6.5x on unhedged 2013e DACF) and $23 per share NAV, wherein NAV is established on $97/bbl and $4.25/mmbtu LT, is reflected by target price of CAD20.
Moreover, upside to the analysts or the consensus approximations will be seen by a colder than ordinary winter and a shift advanced in the CAL13 strip and due to this, price of commodity stays the major risk to the call. From further JV’s, development of industry in de-risking rising liquids plays or quicker growth into drilling new liquids rich plays, upside risk would arrive ahead of the commodity. Furthermore, estimated historical P/E analysis for the years 2012 and 2013 are 21.2 x and 67.3 x, respectively, while for 2011, actual P/E analysis was 50.7 x, the analyst adds further.
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