RE:BMO UpgradeMore details. GLTA
Touting “compelling value and growing shareholder returns,” BMO Nesbitt Burns analyst Michael Murphy upgraded Baytex Energy Corp. to “outperform” from “market perform”
“Supported by strengthening crude prices, and our bullish outlook for 2024, we are upgrading Baytex ... With post-acquisition deleveraging well underway, we forecast the company will generate upwards of $1.4 billion of free cash flow next year, half of which will be returned to shareholders, primarily through share buybacks,” he said. “The stock currently trades at a compelling 2024 FCF yield of 31 per cent (BMO Deck) relative to mid-cap peers at 15 per cent.”
Believing its valuation is “too attractive to ignore,” Mr. Murphy now has a $7.50 target for Baytex shares, up from $5.50 previously. The average target on the Street is $7.31.
“Baytex trades at one of the highest free cash flow yields, and lowest multiples in its peer group, based on our estimates,” he said. “We estimate that the company could liquidate its entire market cap through free cash flow in 3.5 years and its EV in 5.0 years at $90/bbl WTI.”