EnCana Still Lower as UBS Downgrades to Neutral; RBC reportedly keeps Outperform
EnCana Corp (ECA.TO) is down 9 cents at 32.81, well off the day high 33.20 struck earlier but also well above a day low 32.54, as UBS downgraded its rating to Neutral from Buy, but kept a target price of US$34 on the stock.
Elsewhere, RBC Capital Markets reportedly kept its Outperform rating and US$37 price target
"We believe EnCana is positioning itself adequately for a possible new era of supply driven, lower natural gas prices in North America. We think the key to providing investors with adequate returns will be the ability to continue to control costs effectively, while growing and retaining significant scale in the various plays as a means to drive down costs and ensure an adequate growth inventory," UBS said in a morning note.
UBS said its target price is based on its sum of the parts risked NAV (discount rate 10%, long term WTI US$81/bbl, NYMEX US$6.50/mcf), incorporating specific risk factors for each asset within the company's portfolio. The target price is equivalent to a 6.6x EV/EBITDA multiple on our own 2011 estimates.
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