- Canadian Natural Resources (CNQ -0.4%) is downgraded to Neutral from Overweight with a $36 price target at J.P. Morgan, which believes "balance sheet pressures could build in 2016 at a time when the company’s hedges are rolling off.”
- The firm says CNQ has done well in controlling operating costs while aggressively cutting down on capital cost in 2015, but the company will need capital for the Horizon ramp in 2016, which JPM expects to be higher than in 2015, meaning CNQ would face challenges to cutting capex and likely see an impact on production, which is expected to decline in 2016.
- The firm thinks CNQ's 2016 consensus earnings expectations appear too high, even assuming a higher oil price curve.