The Globe and Mail reports in its Wednesday edition that RBC analyst Greg Pardy continues to "look favourably" on the strategic direction of Cenovus Energy, despite lowering his financial expectations for the Calgary-based company due to Alberta's mandated production cuts.
The Globe's David Leeder writes in the Eye On Equities column that Mr. Pardy says, "In our eyes, the company's operating momentum and velocity of change from a balance sheet deleveraging perspective are unmistakable."
Mr. Pardy cut his 2020 production outlook by 10 per cent to 469,100 barrels of oil equivalent per day from 518,800 boe/d previously. That led to a cash flow and earnings per share decrease to $2.53 and 52 cents, from $2.70 and 56 cents.
Mr. Pardy says in a note: "In the context of $3.1-billion of operating cash flow and a 2020 capital program of $1.4-billion (toward the higher end of its stated range), we expect Cenovus to generate circa $1.7-billion in free cash flow, before dividends of about $246-million. This would equate to a 2020 estimated FCF yield of 9.8 per cent (vs. our global integrated peer group average of 8.3 per cent)."
He kept an "outperform" rating and $14 share target, 90 cents below the consensus.
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