The Globe and Mail reports in its Tuesday, May 7, edition that CIBC analyst Jamie Kubik cut Bonavista Energy to "underperformer" from "neutral," following an operational update that saw production and cash flow fall short of his forecast. The Globe's David Leeder writes that Mr. Kubik lowered his share target to $1 from $1.50. Analysts on average target the shares at $1.33. Mr. Kubik says in a note: "Management also announced its dividend will be eliminated, which is likely seen as an overdue event given balance sheet constraints. The future operations note included within the company's financial statements also carries concern in our view, as these are never injected into disclosure without considerable care. Our prior estimates indicated BNP would be treading close to its covenants by mid-2020; however, management indicated a potential breach could occur within the next 12 months, and it intends to seek covenant relief from its creditors (with optimism that it will be granted). While it is early in this process, and we are never fans of rating revisions around what could be market troughs, we feel it is prudent to take a more cautious stance until better visibility emerges around the company's liquidity."
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