morning mtnewswire Whitecap Resources Buy Rating Reiterated at TPH Following Dividend Boost
09:45 AM EDT, 05/17/2021 (MT Newswires) -- Tudor, Pickering & Holt on Monday reiterated its buy rating on the shares of Whitecap Resources (WCP.TO) with a C$7.00 target price after the company raised its monthly dividend by 8%.
"WCP is increasing their dividend by 8%, equal to C$0.195/shr annualized, and a 3.5% yield (3.2% prior) based on Friday's close; we expect the enhanced shareholder returns to drive outperformance this morning," the investment bank said in a note. "For 2022, on strip pricing we model cash flow of C$1.1B, which aligns with the high end of the company's disclosure of C$950MM to C$1.1B, at $55-65/bbl WTI with FCF (post-dividend) of C$450MM mapping to a corporate payout ratio of ~60% (company stating C$250-400MM of FCF at $55-65 WTI). The dividend appears highly resilient as even at $50/bbl WTI, we model a corporate payout of ~80% in 2022, with leverage at 1.3x (0.6x on strip). The company has also re-upped its buyback for another 12 months, with authorization to buyback ~5% of outstanding shares (~30MM shares); under the prior year's buyback program WCP re-purchased 2.5MM shares. Interest in the name has seen a notable pickup of late, as investors dig into the revenue potential of their CCS assets under a possible 45Q setup for Canada, and with the stock trading at a 17% FCF yield and 3.6x EV/EBITDA in '22, we don't see any of the CCS value currently reflected in the share price."
(MT Newswires covers equity, commodity and economic research from major banks and research firms in North America, Asia and Europe. Research providers may contact us here: https://www.mtnewswires.com/contact-us)
Price: 5.84, Change: +0.23, Percent Change: +4.10