Join        Login             Stock Quote

Pinecrest Energy (PRY) Downgraded to 'Sector Performer' By CIBC, PT Lowered

 November 27, 2012 01:46 PM

(By Balaseshan) CIBC World Markets Inc. analyst Adam Gill downgraded his rating of Pinecrest Energy Inc. (CVE: PRY) to "sector performer" from "sector outperformer" and cut his price target to $2 from $2.75.

As was announced last week, Pinecrest and Spartan will merge to form a dividend-paying corporation, Gill noted. The company is expected to keep production flat in 2013 and plans to pay an annual dividend of $0.155 per Pinecrest share, or an 8.7 percent yield for the next applicable 12 months (8.0 percent for 2013).

Overall, the analyst believes that the dividend model makes sense in this sideways commodity price environment, but believes that there are a few issues that make Pinecrest's model a little more risky than he would like, notably the very high corporate decline rate.

Based on Gill's estimate, he believes that in order to keep production flat around 9,250 Boe/d, the company will need to invest $165 million (versus management expectations of $130 million), leading to a total payout ratio of 149 percent. This is due to his higher assumed decline and capital efficiency assumptions.

In conjunction with the analyst's higher-than-group average payout ratio and the steep decline, his net asset value decreases. Lower growth is the main driver of his price target reduction.

The brokerage raised its 2012 cash flow per share estimate to $0.33 from $0.32, while lowering its 2013 estimate to $0.32 from $0.39.

PRY is trading down 3.45 percent at $1.68 on Tuesday.

iOnTheMarket Premium


Post Comment -- Login is required to post message
Alert for new comments:
Your email:
Your Website:

rss feed

Latest Stories

article imageMBIA Inc. (MBI) : BTI's $12 a Tough Task

MBIA Inc. (NYSE:MBI) is doing well on a day stocks are struggling The guarantee insurance company is the read on...

article imageUrban Outfitters, Inc. (URBN) Q2 Earnings Preview: A Snug Fit

Urban Outfitters, Inc. (NASDAQ:URBN) will hold a webcast to discuss its second quarter of fiscal-year 2015 read on...

article imageEstee Lauder Companies Inc. (EL) Q4 Earnings Preview: Options Player Betting On EL’s EPS Looking Pretty

Estee Lauder Companies Inc. (NYSE:EL) will release fiscal 2014 fourth quarter and full year financial read on...

article imageHerbalife Ltd. (HLF): 3 Reasons To Pay Attention to Recent Insider Buying

Well, well, well… it looks as if boardroom buyers viewed the recent selloff as an opportunity to buy. read on...

Popular Articles

Daily Sector Scan
Partner Center

Related Articles:

Recent Articles by Balaseshan
More Articles on: Oils/Energy , Americas , Trading Idea

Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.