Encana in 1Q15: Huge Impairment Charge Leads to Net Loss
(Continued from Prior Part)
What is Wall Street saying?
Now let’s look at Wall Street recommendations for Encana (ECA) following its latest quarterly earnings release on May 12.
Most rate Encana a “hold”
Approximately 46% of Bloomberg-surveyed analysts that track Encana (ECA) rate it a “buy” or some equivalent. Approximately 54% rate the company a “hold” or an equivalent. Currently, there’s no analyst surveyed by Bloomberg recommending a “sell.”
In comparison, approximately 65% Bloomberg-surveyed analysts that track Cenovus Energy (CVE) rate it a “hold” or some equivalent, and only 71% of analysts rate Linn Energy (LINE) a “hold.” Approximately, 24% of the analysts tracking EQT (EQT) rate it a “hold.”
EQT makes up 0.85% of the Energy Select Sector SPDR Fund (XLE).
Analyst recommendations
Following the disclosure of Encana’s financial results on May 12, RBC Capital Markets, a Canadian investment bank and a part of the Royal Bank of Canada, gave Encana (ECA) a target price of $14. Encana (ECA) currently trades near $14, so this would imply a negligible return for the next 12 months.
Investment bank Morgan Stanley (MS) set a target price of $18, implying a handsome ~30% return from Encana over the next 12 months.
BMO Capital Markets gives Encana (ECA) a “market perform” recommendation. Its $16 target would imply a healthy 15% return over the next 12 months.
French investment bank Société Générale set $12.52 as a target price for Encana (ECA), with a “hold” recommendation, which would imply a -9.7% return over the next 12 months.
Barclays (BCS) gave Encana the most pessimistic one-year target price of $12, which would imply about a -13% return.
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