By David Berman
Some analysts and investors are getting giddy over beaten-up energy stocks, now that oil has come off its highs for the year. The latest: Greg Pardy, an analyst at RBC Dominion Securities, upgraded his recommendation on Cenovus Energy Inc. (CVE) -- the oil producer recently hived off natural gas producer Encana Corp. (ECA) – to “outperform” from “sector perform” after a 15 percent pullback in the price. He maintained a 12-month price target of $42.
“Although Cenovus’ premium valuation has certainly given us pause in the past, we continue to like its long-term oil sands growth profile and admire its best-in-class in-situ assets at Foster Creek and Christina Lake,” Mr. Pardy said in a note.
Since the end of April, the price of crude oil has been in sharp decline, falling 15.6 percent. It hovered at around $96 a barrel on Tuesday in late-morning trading.
Canadian energy stocks within the S&P/TSX composite index have actually outperformed the commodity: They have tumbled a total of 11.8 percent, but began their descent earlier at the start of March. Suncor Energy Inc. (SU) has fallen 17.3 percent since then, while Canadian Oil Sands Ltd. (COSWF.PK) has fallen 12.3 percent since early April.