UBS: Canadian Natural Resources Remains Attractive

Canadian Natural Resources Ltd.'s (CNQ) announcement on Tuesday that it had reduced its capital spending and production guidance for 2008 has resulted in a number of price target reductions from the Street.

UBS analyst Andrew Potter reduced his target from C$95 to C$90 after lowering his 2008 and 2009 capital expenditure estimates by C$1.1 and 3.3-billion respectively, and his production estimates by 8% and 13%.

He did however, maintain his "buy" rating, saying the company's long-term story remains very strong.

In a research note, Mr. Potter said,

While we were surprised at the magnitude of the cut to 2008 capital spending we continue to believe that Canadian Natural is poised to deliver well above the industry average production and cash flow per share growth over the next 5 years (our revised forecast still implies an 8% production compound annual growth rate from 2007-2013 and 9% CFPS CAGR).

We continue to believe that Canadian Natural remains a very attractive re-rating story as long-life, highly valued oil sands comprise a greater portion of the company's producing asset base.

Analysts from Citigroup, RBC Capital, and Canaccord Adams also reduced their price targets.

Meanwhile, Blackmont analyst Mennon Hulshof left his "hold" rating and C$74 price target unchanged. He said major revisions made to his 2008 and 2009 capex and production estimates were offset by an update to his commodity pricing forecast based on current commodity markets.