Markets

Analyst Actions: Credit Suisse Raises Baytex Energy Target Price with Commodity View

Brent price forecast unchanged but NYMEX weakness could persist near-term. "Credit Suisse has updated its commodity price view to reflect downward adjustment to NYMEX natural gas prices and a narrower differential between WTI and Brent. "The Brent oil price forecast itself is unchanged. For NYMEX gas, Credit Suisse expects weakness to persist near-term as production takes time to fall in response to falling rig counts (mitigating factors include wells behind pipe, liquids drilling and efficiency gains). The long term view of the NYMEX gas price is unchanged at $5.50. The Brent forecast continues to reflect a 3.4% global GDP growth rate for 2012 with downside demand risk balanced by real supply risk across MENA and other significant producers (e.g., Venezuela, Russia, Nigeria). Please see our full report for complete details of changes, including for Edmonton Par, AECO and the WCS differential."

Revising Baytex Estimates After New Oil Price Forecasts. "Incorporating our new oil and gas price forecasts as well as operational updates, we have made the following changes to full year estimates for Baytex. Our 2011 EPS/CFPS go from C$1.79/4.49 to C$1.94/4.68 while 2012 go from C$2.15/4.90 to C$2.12/5.07. Our 2013 EPS estimate is lowered to C$3.25 from C$3.29."

Raising Target Price to C$52. "With higher near-term cash flow benefitting from stronger oil pricing and a narrower WCS differential, we have taken our Baytex target from C$50 to C$52. Our target is based on 8.50x 2013E EBIDAX of C$794 million, a ~30% premium to mid-cap peers given Baytex's superior capital efficiency and growth prospects. With only modest change to our target, we are leaving our Neutral rating unchanged at this time."

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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