See Bir on a longer term....<
Following in-line quarterly results, Raymond James analyst Jeremy McCrea raised his recommendation for Birchcliff Energy Ltd. (
) to “outperform” from “market perform,” touting its growth in the Montney formation and seeing its shares having reach a bottom.
“Investors have seen plenty of volatility with BIR shares over the past few years,” he said. “Nevertheless, the company has continued to profitably invest in its core Montney position at Pouce Coupe, establishing infrastructure and a well delineated region that would be much more costly to recreate today. Although in 2022 BIR reaped the benefits of its unhedged production strategy, the recent decline in gas prices has put pressure on BIR’s stock, with the company adding a small amount of debt now to cover both the dividend and capex plans.
“Nevertheless, the key takeaway from the quarter will be the unveiling of a new core area in the Montney, that seems to be highly over-pressured in the gas region at Elmworth. Despite minimal production today, this could be a key source of gas supply as more LNG comes on stream – likely at attractive economics based on high-level geographic trends throughout the region. With a 10-per-cent dividend, an in-line quarter, and minor adjustments to guidance, this update should be welcomed by investors (and potentially reverse high short selling positions). Combined also with what appears to be ‘peak pessimism’ on gas weighted names and early indications TC Energy is changing its ‘IT/FT’ transport policies this summer, we believe we may have finally seen the lows in BIR’s stock.”
Mr. McCrea maintained an $11 target for Birchcliff shares. The current average is $10.47.
Others making changes include:
* Stifel’s Michael Dunn to $7.80 from $8 with a “hold” rating.
* Canaccord Genuity’s Mike Mueller to $10 from $10.50 with a “buy” rating.