RE:RE:RE:RBC's $8 TargetThis is absolutely excellent.
CashHungry wrote: Is $11-14 a reasonable near term target? It is reasonable based on current market conditions and expected cashflows. However, doubling a stock price after it's already up nearly 300% from year lows is no easy feat.
Came across an article that did a very useful valuation of CPG using the DCF method.
https://ca.finance.yahoo.com/news/investors-undervaluing-crescent-point-energy-112712966.html
As you will see, the Net Present Value (NPV) of CPG is calculated to be $12.21. This is not a target price, but a figure representing what CPG should be worth today based on anticipated future cash flows. In the calculation they forecast cashflows for each of the next 10 years and then also work out a terminal value for all cashflows beyond 10 years. For the early years the cashflows are relatively high, although lower than RBC estimates and then decline for each subsequent year (averaging around 500 mil). Each years Cashflow including the terminal calculation is discounted back to the present value using a discount rate of 8.9%. The scenario of cashflows reflects a declining business with WTI probably in the $55 to $60 range for years beyond the next couple. If the NPV was based on longterm annual Cashflows averaging 1 Billion (requiring $75 WTI), then CPG's value would no doubt be closer to $20 - which I think is more realistic.