| Morgan Stanley Says Encana Is 'Pulling The Trigger,' Upgrades To Overweight | |
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In a report published Tuesday, Morgan Stanley analyst Benny Wong upgraded shares of Encana Corporation (USA) (NYSE: ECA) to Overweight from Equal-weight with a price target raised to $18 from a previous $15 based on an improving asset base.
According to Wong, Encana's asset base continues to improve as it becomes increasingly liquids weighted – rising from 10 percent in 2013 to an estimated 40 percent in 2016. A greater focus on liquids brings improving productivity for the company while decreasing costs. In fact, Encana has the highest liquids growth among its U.S. peers with a 37 percent compounded annual growth rate through 2018.
"We see liquids growth start to outperform peers in the next 12 months with the potential of further non-core divestitures to deleverage," Wong wrote. "Both are key to the re-rating potential of Encana into a liquids weighted E&P."
Wong noted that the company's balance sheet is expected to improve from 3.4x 2015 net-debt-to-trail cash flow (versus 2.4x U.S. peers) to 2.6x (versus 2.8x peers) in 2016. The analyst also added that Encana's sale of non-core asset including the DJ Basin and San Juan ($1.4 billion to $1.6 billion) and Haynesville ($1 billion) could improve its net debt-to-trailing cash flow to approximately 2.0x.
Bottom line, Encana is an "improving story" that investors will ultimately recognize with a re-rating to a higher valuation and narrow the valuation gap with its U.S. peers over time. Moreover, the analyst's price target implies a total return of around 35 percent, the greatest in his Canadian Energy coverage.
Latest Ratings for ECA
Date | Firm | Action | From | To |
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Apr 2015 | Morgan Stanley | Upgrades | Equal-weight | Overweight | Apr 2015 | Bank of America | Upgrades | Neutral | Buy | Apr 2015 | Deutsche Bank | Maintains | | Hold |
View More Analyst Ratings for ECA
View the Latest Analyst Ratings
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Encana Corporation
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EXPLORATEUR |
CODE : ECA.TO |
ISIN : CA2925051047 |
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ProfilIndicateurs de MarchéVALEUR : Projets & res.Communiqués de PresseRapport annuelRISQUE : Profile actifsContactez la cie |
Encana est une société de production minière de pétrole et de gaz basée au Canada. Encana détient divers projets d'exploration au Canada. Son principal projet en exploration est BUFFALO HILLS au Canada. Encana est cotée au Canada et en Allemagne. Sa capitalisation boursière aujourd'hui est 4,8 milliards CA$ (3,7 milliards US$, 3,3 milliards €). La valeur de son action a atteint son plus haut niveau récent le 23 novembre 2018 à 9,99 CA$, et son plus bas niveau récent le 24 janvier 2020 à 4,96 CA$. Encana possède 973 120 000 actions en circulation. |