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. (NYSE:CVE) -- the oil producer recently hived off natural gas producer Encana Corp. (NYSE: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. (NYSE:SU) has fallen 17.3 percent since then, while Canadian Oil Sands Ltd. (OTCQX:COSWF) has fallen 12.3 percent since early April.