Inside the Market’s roundup of some of today’s key analyst actions
Seeing its positive momentum continuing into 2022, Canaccord Genuity analyst Matt Bottomley raised his rating for shares of Organigram Holdings Inc. (OGI-T) to “speculative buy” from “hold” from the release of better-than-anticipated first-quarter financial results.
Before the bell on Tuesday, the Moncton-based company reported total revenue of $30.4-million, up 22.1 per cent quarter-over-quarter and exceeding Mr. Bottomley’s $28.6-million forecast. The beat came largely from a 9-per-cent jump and increased international sales (to $3.4-million). An adjusted earnings before interest, taxes, depreciation and amortization loss of $1.9-million was an improvement from a loss of $4.8-million in the prior quarter and also ahead of his projection (a $3.7-million loss).”
“Organigram Holdings Inc. reported FQ1/22 financial results (for the period ended November 2021) that represented a second sequential quarter of revenues and adj. EBITDA that came in higher than our expectations, as the company continues to build on the positive momentum from the end of FY21,” the anayst said.
“Although we believe the Canadian cannabis landscape continues to face a variety of headwinds (increasing competition, pricing pressures, etc.), we believe Organigram has demonstrated strong execution over the past two quarters in its ability to pivot products to offer a wider array if in demand SKUs and has effectively doubled its market share on a year-over-year basis.”
Mr. Bottomley said he’s “encouraged” by Organigram’s prospects for the year, prompting his upgrade. Howver, he said a “speculative” rating is “most appropriate at this time given the relatively fast pace at which the Canadian sector has experienced market share fluctuations among leaders in the space.”
After “modest” upward revisions his near-term revenue estimates, he raised his target for Organigram shares to $3.25 from $3. The average target on the Street is $3.23, according to Refinitiv data.
“OGI currently trades at approximately 3.1 times its 2022 EV/Rev [enterprise value to revenue] compared to other Canadian market leaders at 4.7 times and the overall LP average is 2.4 times,” said Mr. Bottomley. “Further, OGI is one of only three Canadian LPs that has received a large equity investment from a global strategic player with British American Tobacco taking a 20-per-cent stake in the company.”
Elsewhere, Stifel’s Andrew Partheniou trimmed his target to $2.25 from $2.75 with a “hold” recommendation.
“OGI reported good Q1FY22 results with significant profitability improvements and the best gross margin since Q4FY20,” he said. “The company achieved this through continued scale with unabsorbed overhead likely being nearly eliminated next quarter as it is currently producing at full capacity, partial contribution from SHRED price increases, greater edible contribution and operational efficiencies. Looking forward, the company expects to continue progress, complemented by its recently announced Laurentian acquisition bringing profitability ex. R&D 1 quarter earlier to Q3FY22. However, near term risk is elevated and out of OGI’s control given COVID-driven labour shortage potential and a seasonally low quarter. Matched with our uncertainty on the ceiling to R&D expenses, clouding our visibility on consolidated profitability timing, we retain our cautious stance.”
Blaming a warmer winter, Raymond James analyst Steve Hansen lowered his rating for Superior Plus Corp. (SPB-T) to “market perform” from “outperform” on Wednesday.
“While warmer year-over-year weather is expected to weigh on SPB’s baseline 4Q21 volume, recent tuck-ins, incremental commercial recovery, and healthy wholesale gains are expected to facilitate modest growth,” he said. “Regional weather variances were again notable: 1) Canada: 2-per-cent warmer year-over-year (deep freeze in west/balmy in east); and 2) U.S.: 2-per-cent warmer year-over-year. While the warmer U.S. weather proved a notable headwind, we still expect U.S. volumes to grow 5-10 per cent owing to recent tuck-ins (i.e. Freeman, Williams, Hopkins, Mountain). While still early in the period, we note Canada has started 1Q22 on a frigid tone, while the U.S. is still modestly warmer year-over-year.
Mr. Hansen also expects a slowdown in M&A activity this year as the company “digests its recent flurry of deals,” including the US$240-million acquisition of Kamps Propane. He pushed back his timeline for the close of that deal to the early portion of the second quarter, noting it’s “a shift that unfortunately extends past a key heating season.”
While he emphasized he continues to “admire Superior’s long-term growth prospects (organic, M&A) and healthy dividend,” Mr. Hansen cut his target for its shares to $15 from $16.25 after “modest” cuts to his financial forecast. The average target on the Street is $16.08.
Canadian Natural Resources Ltd.’s (CNQ-T) 2022 guidance places a “focus on strong shareholder returns with a dash of capital efficient growth,” according to ATB Capital Markets analyst Patrick O’Rourke
Shares of the Calgary-based company rose 1.8 per cent on Tuesday following the premarket announcement, which including a capital spending budget of $4.35-billion, exceeding both Mr. O’Rourke’s forecast of $3.46-billion and the consensus estimate on the Street of $3.8-billion.
“Overall, we view the event as neutral-to-positive,” he said. “The base capital budget of $3.6bn and production guidance mid-point of 1.295 million barrels of oil equivalent per day come in directly in-line with street expectations, while the Company is layering in an additional $700-million in 2022 Oil Sands growth capital, with an incremental $500-million through 2024 that will ultimately add 63.0 million barrels per day by 2025. While the broader energy equity markets have not necessarily been conducive to/supportive of growth strategies over the past several years, at a production addition cost of $19.2k/flowing boe/d vs an ATB 2022 estimated EV valuation of $62k/flowing boe/d, this growth appears to have the potential to create clear shareholder value at a time when there is little by way of Oil Sands growth competition and a line of site towards a structurally improved egress and differential environment. Finally, the shift to 50-per-cent FCF allocation on the back of achieving CNQ’s $15-billion debt target (after dividends/strategic growth requirements), has been well signaled to the market in the Company’s previously existing capital allocation framework.”
After raising his production and cash flow projections for 2022, Mr. O’Rourke increased his target for Canadian Natural shares to $69 from $67.50 with an “outperform” recommendation. The average on the Street is $65.35.
“Canadian Natural Resources (CNQ) has built a robust portfolio of assets that provides commodity diversification to the Company,” he said. “The Company offers investors an asset base that has been built through the drill-bit (and shovel), while also being a strategic acquirer in the M&A landscape. Referred to as the buyer of last resort by other producers, the Company has made a reputation of being in the right place at the right time, often acquiring other companies counter-cyclically to the business cycle. CNQ has shown a commitment to investing where others are showing weakness. As a result of its willingness to engage when others are not, the Company has become one of the most dominant producers in the oil sands and the WCSB. CNQ holds the highest PDP RLI [Proved Developed Producing Reserve Life Index] – a critical metric and enviable position in our view, offers a 2022e FCF/EV yield of 13.7 per cent (vs peers at 15.7 per cent), while maintaining a strong BS (2022 estimated D/CF of 0.8 times, vs peers at 0.8 times).”
Others making target changes include:
* National Bank’s Travis Wood to $74 from $76 with an “outperform” rating.
“The wedge of growth capital is admittedly higher than expected, but somewhat appreciated given the limited full-cycle spend through much of the last two years (call it catchup capital). This, when coupled with a proven track record of operational execution and delivering on expectations, makes the prospect of modest growth palatable looking out to 2025,” said Mr. Wood.
* RBC Dominion Securities analyst Greg Pardy to $66 from $60 with an “outperform” rating.
“Our bullish stance toward CNQ was reinforced by its 2022 budget and reflects strong shareholder alignment, a long life-low decline portfolio, significant shareholder returns, a strengthening balance sheet and best in class operating performance ... CNQ is our favourite producer and on both our Global Top 30 and Energy Best Ideas lists,” said Mr. Pardy.
* Stifel’s Robert Fitzmartyn to $80 from $67.50 with a “buy” rating.
“CNRL has announced its 2022 capital budget, delayed by 1 month out of its usual planning cycle given global COVID influences which have introduced some volatility into market thinking on crude oil demand factors, though overall the market continues to look balanced under an OPEC+ supply managed framework. The largest swing in our forecast will be the formal reflection of future share repurchase activity of which its excess free cash flow distribution policy is unchanged in the lead up which is the principal driver to a 5-per-cent/9-per-cent lift to projected 2022/2023 AFFOPS [adjusted funds from operations per share] on receipt of this release.”
* TD Securities’ Menno Hulshof to $69 from $63 with a “buy” rating.
“CNQ remains one of the most sustainable business models within our coverage and should remain a core holding for any energy investor looking for Canadian exposure, in our view. We highlight very strong operational performance in recent quarters and significant torque to these much higher oil prices,” said Mr. Hulshof.
Though he sees the fundamentals in the copper market “strong” to start 2022, National Bank Financial analyst Shane Nagle warns headwinds could be poised to build.
“Copper prices remained well-supported throughout 2021 and fundamentals are strong to start 2022 as refined inventories are low, demand remains strong and speculative investment is near its lowest level since the onset of the pandemic,” he said in a research note released Wednesday. “Ongoing inflationary pressures, tightening monetary policies worldwide and forecasted supply growth into 2023 may create more volatility than experienced throughout 2021. Long-term fundamentals for copper remain attractive given the lack of advanced-stage projects in the pipeline to meet rising long-term demand.”
Though inflation did not “materially” impact to 2021, Mr. Nagle expects “elevated” operating and capital budgets to be announced in the coming weeks, pointing to ongoing supply chain issues, high consumable prices and increased labour contracts.
“Throughout previous cycles, inflation was most prevalent in large-scale Greenfield development projects, as a result, we highlight a breakdown of upcoming capital budgets for our coverage universe with CMMC, CS, LUN and TKO having the highest proportion of Greenfield capital spending in the coming years,” he said.
Despite this cautious view, Mr. Nagle sees equity valuations remaining “compelling.”
“NBF Base Metal coverage is currently implying a copper price of US$3.39 per pound or 77 per cent of spot for producers and US$2.68 per pound or 61 per cent of spot for developers — these levels have been largely unchanged throughout the latter half of 2021 as equities remain discounted relative to underlying copper prices,” he said. “Combining our valuation/sensitivity analysis alongside key themes and deliverable catalysts for the upcoming year, TECK/B, HBM and CMMC screen favourably as our top picks.”
Among his top picks, Mr. Nagle raised his target for Teck Resources Ltd. (TECK.B-T) to $55 from $48.50 with an “outperform” rating. The average on the Street is $43.71.
“Despite some logistical challenges in Q4/21 (persisting into 2022) stemming from heavy rainfall in BC, Teck’s coal business is set for a significant improvement throughout H1/22 at a time when seaborne coking coal prices are well supported above US$375 per ton as a result of tight supply,” he said. “The completion of QB2 in 2022 will also drive near-term copper/FCF growth leading to increased shareholder returns.”
He cut his Copper Mountain Mining Corp. (CMMC-T) target to $4.75, below the $5 average, from $5.25 with an “outperform” rating.
“Despite embarking on a large capital spend at Eva, Copper Mountain has several additional catalysts as the Copper Mountain mill expansion to 45,000 tpd was completed in H2/21 and ongoing exploration efforts at both Eva and New Ingerbelle are expected to showcase longer-term optionality of the portfolio,” said Mr. Nagle.
His target for Hudbay Minerals Inc. (HBM-T) remains $12.50 with an “outperform” rating. The average on the Street is $12.66.
“2022 represents an operational inflection point as high-grade ore from Pampacancha and production from New Britannia continue to ramp up,” he said. “More clarity on the private land-only alternative for Copper World and resolution of the Rosemont appeals process in H1/22 are expected to result in the market allocating some value to what currently represents a free option within the portfolio.”
Mr. Nagle’s other target price adjustments are:
- Adventus Mining Corp. (ADZN-X, “outperform”) to $1.60 from $1.55. The average on the Street is $1.66.
- Capstone Mining Corp. (CS-T, “outperform”) to $8.25 from $7. Average: $7.68.
- Ero Copper Corp. (ERO-T, “sector perform”) to $21 from $30. Average: $27.68.
- Flo Mining Corp. (FIL-T, “outperform”) to $16 from $13. Average: $14.92.
- First Quantum Minerals Ltd. (FM-T, “outperform”) to $40 from $37. Average: $34.41.
- Josemaria Resources Inc. (JOSE-T, “tender”) to $1.55 from $1.60. Average: $1.70.
- Trevali Mining Corp. (TV-T, “sector perform”) to $2.25 from $2.50. Average: $2.73.
- Trilogy Metals Corp. (TMQ-T, “outperform”) to $3.75 from $4.25. Average: $3.79.
Touting the potential from its “strategic pivot to drive sustainable growth” and seeing a “strong” fundamental industry outlook, iA Capital Markets analyst Naji Baydoun initiated coverage of UGE International Ltd. (UGE-X), a Toronto-based provider of distributed renewable energy solutions, with a “speculative buy” rating.
“Overall, we view the current macro-economic context as being highly favourable for investments in renewable power resources, underpinned by several macro factors that could drive (1) annualized growth of 20 per cent through 2035 and more than 10 per cent through 2050 for solar energy in the U.S., and (2) potentially even stronger near-term growth for community solar,” he said.
“UGE is currently in the early stages of its strategic repositioning towards a more traditional IPP model. As the Company begins to scale up its portfolio of operating assets and accelerate its project development, we expect it to offer investors an investment vehicle that carries both a lower risk profile and more predictable growth and return potential.”
Mr. Baydoun sees UGE on a “path to more sustainable growth and profitability,” believing its current backlog and development prospects both provide “good visibility” on future gains and sets its up for “success” in achieving its 2024 objectives.
“The expected clean power tax incentive changes in the U.S. should provide policy certainty and support for UGE’s investment outlook,” he said. “Assuming the Company can secure the capital it needs to finance its initial scale-up and execute on its growth strategy, we believe that UGE could (1) achieve attractive risk-adjusted project returns, and (2) be positioned to improve its access to capital and further accelerate growth over time.”
“UGE currently trades at a discounted valuation relative to larger, more established peers. We see significant upside potential to the current share price from continued execution on the current growth strategy and a potential positive valuation re-rating over time.”
Mr. Baydoun set a target of $3.25 per share. The current average is $3.88.
“UGE offers investors (1) improving growth and cash flow fundamentals (driven by its strategic pivot towards contracted project development), (2) exposure to the high-growth community solar market in the US (20-30 per cent plus CAGR [compound annual growth rate] through 2030), (3) attractive risk-adjusted project returns (double-digit equity IRRs), and (4) a discounted valuation compared with peers,” he said.
In a research report titled Growth Stock Enters Value Territory, Scotia Capital analyst Konark Gupta reaffirmed Cargojet Inc. (CJT-T) as “a top pick,” expressing “high conviction” in its growth outlook.
“CJT is down approximately 2 per cent year-to-date after losing 22 per cent in 2021 as multiple has significantly compressed to near 1 standard deviation at 10 times EV/EBITDA from 14 times pre-pandemic (peaked at 16.5 times),” he said. “Meanwhile, EBITDA run-rate has nearly doubled and net debt has declined by over 50 per cent since pre-pandemic (i.e., leverage ratio is down to 1.0 times from 4.0 times). Further, our forward estimates (as well as consensus) have been increasing since March 2021.
“As we have been pointing out over the past several months, we believe the stock is in the penalty box due to overblown concerns about potential competition and over-capacity risks , while investor focus may also have been shifting toward reopening plays (e.g., travel stocks such as airlines). However, we think the multiple is likely to re-rate this year as CJT potentially surprises with 2021 EBITDA growth, despite a very tough comp, and indicates stronger growth in 2022, perhaps announcing new contracts (besides renewals).”
Mr. Gupta “conservatively” raised his fourth-quarter EBITDA estimate by 10 per cent to $83-million, which he notes sits 5 per cent above consensus and implies a full-year EBITDA of $285-million (up 1 per cent year-over-year and 79 per cent versus 2019).
“Although 1-per-cent growth in 2021 is not material, we think the market could be surprised by positive growth given prior expectations were for a year-over-year decline due to very tough comps (transitory tailwinds in 2020 from PPE demand and surge in spot rates),” he said. “The key drivers for our Q4/21 estimate increase are stronger peak season (potential boost to e-commerce from Omicron fears), domestic volume tailwinds from flooding in B.C., potential transpacific volume upside from rapid test imports, and resurgence in spot rates. We expect growth to accelerate in each of 2022, 2023, and 2024 , supported by CJT’s addition of 13 aircraft through 2024 (9-10, net of replacement).
“While equity raise and long-term capex plans weighed on the stock last year, we expect positive catalysts this year in the form of new contract wins, which should alleviate investor concern about over-capacity . In particular, we expect CJT to announce ACMI contracts utilizing several B767 aircraft. Three B767s are entering the fleet this year, followed by another three in 2023 (some may be for replacement). In addition, CJT could potentially deploy the three upcoming B757s in domestic overnight to free up a few B767s for any incremental ACMI opportunities. Similarly, we expect CJT to announce more early contract renewals during 2022-2023 (likely Canada Post and UPS), which should alleviate investor concern about potential competition.”
Maintaining a “sector outperform” rating, Mr. Gupta trimmed his target for Cargojet shares to $240 from $245, falling below the $249 average, after adjusting his valuation to “better reflect the reopening theme.”
“Although the stock suggests that the market is lacking confidence in CJT’s ability to retain its market position due to potential competition (from Canadian airlines) and to utilize future capacity growth due to rebounding belly capacity and increasing freighter conversions, we have high conviction in our growth outlook,” he said.
TD Securities analyst Brian Morrison is “increasingly constructive” on the outlook for auto parts suppliers, expecting a “gradual” recovery and demand strength to shift the focus of investors to 2023.
“To be clear, the Q4/21 results should demonstrate a material year-over-year decline across the sector,” he said. “This should come as no surprise to investors due to ongoing weak global production volumes, in addition to inflationary cost headwinds. That stated, we have seen a sequential improvement in recent months in North American production volumes, indicating that a gradual recovery may be in its early stages. We also believe that production visibility for the suppliers has improved to a degree relative to Q3/21, when production shutdowns repeatedly took place at short notice that diminished suppliers’ ability to flex labour costs. As such, we have nominally increased our Q4/21 operating margin forecast, but we continue to highlight that they are likely to remain at depressed levels. We do not view the forthcoming Q4/21 results as a catalyst to the sector in-and-of-themselves.”
In a research note released Wednesday, Mr. Morrison raised his target for Linamar Corp. (LNR-T) to $100 from $94. The average on the Street is $96.
Mr. Morrison maintained a $15.50 target for shares of Martinrea International Inc. (MRE-T). The average is $15.44.
“We are maintaining our BUY recommendations on Martinrea, Linamar, and Magna, with our valuation roll-forward to 2023 driving modest upward revisions to our target price for each name. It is our view that consumer demand should remain strong in a rising yet still accommodative rate environment. As production levels increase with improvements in the supply chain, this should foreshadow improving financial results for the sector. This, in our view, should shift investors’ valuation benchmark to 2023, and although applied valuations are likely to be prudently conservative, we believe there should be attractive upside for the sector over the course of 2022″
“Our pecking order is Martinrea, Linamar, and Magna due to return to target prices. We acknowledge that Magna and Linamar, with their liquidity/balance-sheet strength, may outperform more in the near term should our thesis play out.”
In other analyst actions:
* In an earnings preview for paper and forest products companies, Scotia’s Benoit Laprade raised his targets for Acadian Timber Corp. (ADN-T, “sector perform”) to $18.75 from $18.25, Canfor Corp. (CFP-T, “sector outperform”) to $45 from $40, Interfor Corp. (IFP-T, “sector outperform”) to $50 from $44 and West Fraser Timber Co. Ltd. (WFG-T, “sector outperform”) to $143 from $137. The averages on the Street are $18.55, $43.50, $47.83 and $150, respectively.
He lowered his target for Canfor Pulp Products Inc. (CFX-T, “sector perform”) to $7 from $8.50, Cascades Inc. (CAS-T, “sector outperform”) to $21 from $20. The averages on the Street are $7.70 and $18.57, respectively.
* Barclays analyst Raimo Lenschow cut his target for Lightspeed Commerce Inc. (LSPD-N, LSPD-T) to US$57 from US$123 with an “overweight” recommendation, while Piper Sandler’s Clarke Jeffries dropped his target to US$70 from US$128 with an “overweight” rating. The average on the Street is US$90.55.
* Mr. Lenschow also lowered his targets for Open Text Corp. (OTEX-Q, OTEX-T) to US$50 from US$58 with an “equalweight” rating and Descartes Systems Group Inc. (DSGX-Q, DSG-T) to US$80 from US$90 also with an “equalweight” rating. The averages on the Street are US$59.22 and US$90, respectively.
* CIBC World Markets analyst Allison Carson initiated coverage of Victoria Gold Corp. (VGCX-T) with an “outperformer” rating and $24 target, exceeding the $20.90 average.
“. We view this as an attractive entry point and believe Victoria should trade at a premium to peers due to its exploration upside, strong free cash flow generation and M&A potential,” she said.
* In response to its fourth-quarter results and five-year guidance, Canaccord Genuity’s Dalton Baretto lowered his Ero Copper Corp. (ERO-T) target to $23.50 from $25 with a “buy” rating. Others making changes include: CIBC’s Bryce Adams to $22 from $27 with a “neutral” rating; BMO’s Jackie Przybylowski to $29 from $30 with an “outperform” rating and Raymond James’ Farooq Hamed to $24 from $28 with an “outperform” rating. The average is $27.68.
“A solid end to the year, with copper and gold production 6 per cent and 9 per cent above our estimates, respectively,” said Mr. Baretto. “That said, our focus is primarily on the company’s maiden 5-year guidance ... Copper production guidance over the 2022-2026 period is in line with our estimates, while gold production guidance is 10-20 per cent above our forecasts given higher expected production from NX Gold. Cost guidance is largely in line with our estimates on a BRL-adjusted basis.
“The major discrepancy vs. our estimates is on the capex plans going forward, particularly at MCSA. On a consolidated basis, ERO is guiding to total capex of $330-375-million for 2022, and $1.05-$1.24-billion for the 5-year period, well above our previous estimates of $224-million and $749-million, respectively.”
* Mr. Adams also lowered his target for Torex Gold Resources Inc. (TXG-T) by $1 to $21 with a “neutral” rating. The average is $25.33.
* After announcing an investment in NFT Trader on Tuesday, Canaccord Genuity analyst Doug Taylor lowered his Mogo Finance Technology Inc. (MOGO-T) target to $10 from $11 with a “speculative buy” rating. The average is $13.17.
“Mogo’s initial investment through a convertible note will represent a 25-per-cent interest in NFT Trader if converted, with an option to acquire an additional 25-per-cent interest through a secondary purchase of common shares in six months,” he said. “There were few financial details provided, but we believe the investment by Mogo likely numbers in the single-digit millions. Mogo gains option value should the trading of NFTs become more mainstream, at which point this asset could represent a toehold to integrate NFT technology into the Mogo platform. We have not changed our model based on this transaction but take the opportunity to update our forecasts for the recently completed equity raise (US$27.5-million at US$4.50/share including ½ warrant) which leads to some target dilution.”
* BMO Nesbitt Burns analyst Peter Sklar cut his ABC Technologies Holdings Inc. (ABCT-T) target to $7 from $8 with a “market perform” rating. The average is $9.29.
* TD Securities analyst John Mould lowered his TransAlta Corp. (TA-T) target to $17 from $17.50 with a “buy” rating. The average on the Street is $16.32.
“In our view, the repairs required at Kent Hills 1+2 represent a one-off event,” he said. “We view TransAlta’s pivot from a large coal-to-gas repowering initiative to a focus on renewable-power growth as prudent, given Canada’s evolving regulatory landscape for carbon pricing and gas-fired power. As Alberta’s largest generator by capacity (~3.3 GW), we believe that TransAlta’s leading position in Canada’s only deregulated power market cannot be easily duplicated by a competitor. We view the current share price as a good entry point, given TransAlta’s discounted valuation, improved funding profile, near-term opportunities in the Alberta market, and high-quality hydro assets.”
* Mr. Mould also cut his Transalta Renewables Inc. (RNW-T) target to $18 from $19.50 with a “hold” rating. The average is $19.32.
“We consider Tuesday’s 9-per-cent share-price decline to be disproportionate relative to the impact of the required repairs at Kent Hills and revenue uncertainty for 2022 and 2023, and view this as a one-off event. We remain cautious regarding RNW’s mid-term growth outlook; we believe the potential for near-term development opportunities from TA Corp. are relatively opaque (pending further development success at TA Corp. and identified project drop-downs for RNW). We believe that RNW’s current valuation appropriately reflects the company’s near-term outlook,” he said.
* Following Tuesday’s operational update, Stifel analyst Cody Kwong raised his NuVista Energy Ltd. (NVA-T) target to $10.75 from $8.25 with a “buy” rating. The average is $9.35.
“After nearly two years of hovering around the 50,000 boe/d [barrels of oil equivalent per day] mark, a commitment to get back to the drill bit in 2021 has finally bared fruit, with 4Q21 volumes topping the 60,000 boe/d threshold, which was above the target production range and ahead of consensus by over 2,000 boe/d (3 per cent),” he said. “Further, the complexion of its production build was far more condensate rich than anticipated, and when combined with a sporty condensate price environment, leads to a quarterly FFO figure that is expected to be 5-10 per cent ahead of ‘street’ forecasts. Updating our estimates has prompted
a 6-per-cent increase in both our 2021 and 2022 FFO outlook and now with reduced risk in achieving aggressive forward growth targets we have meaningfully increased our target price.”