Deutsche Bank Downgrades EnCana Corp. (ECA) to Hold

Deutsche Bank downgraded EnCana Corp. (NYSE: ECA) from Buy to Hold with a price target of C$18 (from C$21).

Analyst Stephen Richardson said, "Our view at ECA has been that the transactions undertaken in calendar 2014 (selling ~$9.25 Bn in assets, acquiring $10.2 Bn) were transformative to the asset base. In particular, we believe the deals provide a more solid platform for growth (particularly from the perspective of US liquids plays). The challenge to this thesis has been commodity price and that transacting assets in the upstream invariably marks the asset base to market (in the case of ATHL at ~$90/bbl WTI)."

"There is little doubt that the underperformance of the ECA shares from the peak of the cycle has been driven in large part by the Athlon acquisition. The decision to fund the transaction entirely with cash on the balance sheet (proceeds from asset sales) has left ECA with significantly reduced financial flexibility and more dependent than the peer group on the 2015+ commodity price outlook to again return to growth," he added.

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 $12.05 yesterday.

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