Barclays PLC Upgrades Encana Corp. (ECA) to “Overweight”
Encana Corp. (NYSE:ECA) was upgraded by Barclays PLC from an “equal weight” rating to an “overweight” rating in a research note issued on Tuesday. The brokerage currently has a $14.00 price target on the stock, up from their prior price target of $10.00. Barclays PLC’s price target indicates a potential upside of 27.39% from the company’s current price.
The analysts wrote, “core four” assets in the Permian, Eagle Ford, Montney and Duvernay.”Use of Encana’s 2018 capital spending and production indications lead us to infer a very strong return in 2018 on new spending of circa 30 percent on the corporate level (the 2017 inference is muddled by 2016 M&A),” analyst Thomas Driscoll wrote in a note.This inferred return is 18 percent better than the Barclays’ average return for peers. The analyst expects top-tier delivery from the “core four” basins and raised 2017 and 2018 liquids estimates by 6 percent and 20 percent, respectively.Related Link: Russia Wants To Freeze Oil Output … At Its Historical High LevelEncana’s preliminary 2017 budget of $1.4 billion–$1.8 billion is 7 percent above Barclays’ previous estimate. Encana expects to grow liquids volumes by 15–20 percent per year. Looking ForwardDriscoll forecast total volume growth to outpace expansion in market capital deployed by 12 percent through 2018, compared to 5 percent from peers. Assuming flat $55 crude and $3 gas, Encana expects to grow total production by 60 percent by 2021, as it doubles core four asset volumes and grows liquids by 15–20 percent CAGR. Further, Encana continues to reduce drilling and completion (D&C) costs in its core four assets and continues to reduce lease operating costs.Encana, which has ample liquidity and financial flexibility, expects to grow cash flow by 300 percent over the next five years, assuming flat $55 crude and $3 gas prices. “We are currently modeling through 2018 and are expecting 145 percent cash flow growth if we were to use the same commodity price assumptions,”
A number of other research firms have also commented on ECA. Nomura boosted their price target on shares of Encana Corp. from $12.00 to $15.00 and gave the company a “buy” rating in a research report on Monday, September 12th. Zacks Investment Research downgraded shares of Encana Corp. from a “buy” rating to a “hold” rating in a report on Wednesday, July 13th. Deutsche Bank AG reaffirmed a “buy” rating and set a $13.00 price objective (down from $15.00) on shares of Encana Corp. in a report on Thursday, September 29th. BMO Capital Markets reaffirmed a “buy” rating and set a $10.00 price objective on shares of Encana Corp. in a report on Friday, July 22nd. Finally, Royal Bank Of Canada dropped their price objective on shares of Encana Corp. from $10.00 to $9.00 and set a “sector perform” rating for the company in a report on Monday, September 12th. Three research analysts have rated the stock with a sell rating, nine have issued a hold rating and ten have assigned a buy rating to the company. The stock has a consensus rating of “Hold” and an average target price of $11.88.
Shares of Encana Corp. (NYSE:ECA) opened at 10.99 on Tuesday. The firm’s 50-day moving average price is $10.00 and its 200-day moving average price is $8.24. Encana Corp. has a one year low of $3.00 and a one year high of $11.31. The firm’s market capitalization is $9.34 billion.
Encana Corp. (NYSE:ECA) last released its quarterly earnings results on Thursday, July 21st. The company reported $0.10 EPS for the quarter, beating analysts’ consensus estimates of ($0.09) by $0.19. Encana Corp. had a negative net margin of 81.73% and a positive return on equity of 0.79%. During the same quarter last year, the company posted ($0.20) earnings per share. On average, equities analysts forecast that Encana Corp. will post ($0.04) earnings per share for the current year.
The firm also recently disclosed a quarterly dividend, which was paid on Friday, September 30th. Shareholders of record on Thursday, September 15th were issued a $0.015 dividend. This represents a $0.06 dividend on an annualized basis and a yield of 0.55%. The ex-dividend date was Tuesday, September 13th. Encana Corp.’s dividend payout ratio (DPR) is presently -1.79%.
Large investors have recently made changes to their positions in the company. Swiss National Bank boosted its stake in shares of Encana Corp. by 5.2% in the second quarter. Swiss National Bank now owns 4,808,100 shares of the company’s stock worth $37,219,000 after buying an additional 238,500 shares during the period. First Manhattan Co. boosted its stake in shares of Encana Corp. by 43.5% in the second quarter. First Manhattan Co. now owns 104,320 shares of the company’s stock worth $812,000 after buying an additional 31,602 shares during the period. UBS Asset Management Americas Inc. boosted its stake in shares of Encana Corp. by 8.6% in the first quarter. UBS Asset Management Americas Inc. now owns 2,120,040 shares of the company’s stock worth $12,982,000 after buying an additional 168,638 shares during the period. Seven Bridges Advisors LLC acquired a new stake in shares of Encana Corp. during the second quarter worth $346,000. Finally, Credit Agricole S A boosted its stake in shares of Encana Corp. by 4.3% in the first quarter. Credit Agricole S A now owns 93,980 shares of the company’s stock worth $573,000 after buying an additional 3,867 shares during the period. Institutional investors and hedge funds own 57.44% of the company’s stock.
About Encana Corp.
Encana Corp is a Canada-based energy producer, which is engaged in the business of exploration, development, production and marketing of natural gas, oil and natural gas liquids (NGLs). The Company’s operations also include the marketing of natural gas, oil and NGLs. All of its reserves and production are located in North America.
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