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Globe says Surge Energy called a leveraged bet on crude

2021-10-07 07:51 ET - In the News

The Globe and Mail reports in its Thursday, Oct. 7, edition that Stifel analyst Robert Fitzmartyn has an unchanged "buy" recommendation for Surge Energy. The Globe's David Leeder writes in the Eye On Equities column that Mr. Fitzmartyn knocked his share target by 25 cents to $7.75. Analysts on average target the shares at $9.39. Mr. Fitzmartyn made his modest target change in response to its $58-million acquisition of Fire Sky Energy. Mr. Fitzmartyn says in a note: "Surge is deleveraging via acquisition and has issued a sizable chunk of equity, which could infer a potential liquidity overhang though lock-up agreements could mitigate a portion of this in the near term. The company remains a leveraged bet on crude oil price strength as a 0.5 times EV/DACF [enterprise value to debt-adjusted cash flow] uplift would imply an increase of $1.25 per share to the equity." The Globe reported on March 12 that Raymond James analyst Jeremy McCrea upgraded Surge Energy to "market perform" from "underperform" when it was worth $7.10. The Globe reported on Aug. 27 that Mr. McCrea rated Surge Energy "outperform." The shares could then be had for $4.27.

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