CIBC: Outperfortm -Ready To Roll: Resuming Coverage Post-RRX12mnth target: $7 Canadian
In our view, the merger with Raging River is an emphatic statement of Baytex's re-entry to the ranks of the intermediate Canadian oil producers. Whereas the stock has recently occupied a niche on the fringes of investor mindshare due to its high financial leverage and modest growth capability, we believe the new entity stacks up favourably vs. the other mid-cap oil-weighted producers in our coverage universe, particularly considering its discounted valuation. As a result, with the transaction having now closed, we are upgrading Baytex to Outperformer.