UBS Reiterates Neutral on Encana (ECA) Following Investor Day - PT to $11

October 6, 2016 7:51 AM EDT
Get Alerts ECA Hot Sheet
Price: $11.07 -2.04%

Rating Summary:
    15 Buy, 15 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 14 | Down: 11 | New: 8
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UBS reiterated a Neutral rating on EnCana Corp. (NYSE: ECA), and raised the price target to $11.00 (from $9.00), following the company's investor day. ECA disclosed a higher than expected 2017 capex budget of $1.4-$1.8bn (consensus ~$1.5bn) and guided to flattish pro-forma volume growth, below prior consensus estimates of +2%.

Analyst William Janela commented, "ECA outlined a revised 5-year strategy which calls for >60% companywide volume growth by 2021 (~10% CAGR), driven entirely by its Permian (>150 MBoed by 2021 vs. ~50 MBoed currently) & Montney developments while Eagle Ford & Duvernay volumes hold relatively flat. It estimates production from these "Core Four" plays will represent >90% of 2021E volumes (vs. 73% in 2016E) & result in a balanced commodity mix (vs. current ~35/65% liquids/gas mix), driving a significant improvement in cash margins. At a flat price deck of $55/Bbl WTI & $3/MMBtu NYMEX gas, ECA expects it can fully fund this program with cash flow by 2018+ which appears within grasp if somewhat optimistic: we estimate it needs a higher >$58/Bbl to reach FCF neutrality in 2018."

For an analyst ratings summary and ratings history on EnCana Corp. click here. For more ratings news on EnCana Corp. click here.

Shares of EnCana Corp. closed at $10.93 yesterday.

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