By Michele Maatouk
Date: Monday 10 Jul 2023
LONDON (ShareCast) - (Sharecast News) - Jefferies upgraded EnQuest and Capricorn Energy on Monday on valuation versus risks grounds.
The bank lifted both stocks to 'buy' from 'hold'.
"EnQuest and Capricorn have been two of the worst-performing E&P stocks in our coverage this year, but with sector-leading free cash flow yield (EnQuest) and/or net cash balance sheet (Capricorn) we see little balance sheet risk to either name and their price targets are little changed given largely oil-weighted exposure," it said.
"We could also argue a potential regional M&A consolidation angle for either name given ENQ's material UK tax losses and CNE's ex-Shell Egypt production assets & balance sheet," Jefferies said.
"Thus, we upgrade both EnQuest and Capricorn to Buy on valuation versus risk grounds."
Jefferies kept its price target for EnQuest at 20p, and cut the PT for Capricorn to 225p from 230p
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