Scotiabank analysts have modified their outlook on Meg Power (MEG: CN) (OTC: MEGEF), upgrading the inventory to “sector carry out” from a “sector carry out” ranking.
The agency additionally set a brand new value goal of C$35.00 for the power firm. The improve is predicated on expectations for above-average free money movement per share (FCFPS) development, though Meg Power is predicted to start out paying money taxes in late 2027 or early 2028, with West Texas Intermediate (WTI) oil costs at $70.
The analyst emphasised that Meg Power’s sturdy manufacturing development and inventory repurchase program are key drivers of FCFPS’s anticipated sturdy development within the subsequent few years. The corporate expects WTI to develop at 9% at a value of $70. Meg Power’s valuation can be thought-about cheap in comparison with friends, with a projected 2025 debt-adjusted money movement (DAFCF) yield of 9%, in contrast with 8% for oil sands friends and eight% for small- and mid-cap friends. %.
Reviews point out that Meg Power’s distinctive set of high-quality manufacturing property makes it a pretty potential acquisition goal. The corporate’s tax pool, higher-cost debt that may be refinanced at decrease charges, and working synergies are cited as components offering added worth to potential acquirers. As well as, analysts identified that Meg Power’s Christina Lake and Surmont initiatives have a number of manufacturing development alternatives.
Meg Power’s standing as a “clear” story was underscored, suggesting its easy and centered enterprise mannequin might be helpful if acquired. Nevertheless, analysts gave no indication {that a} deal was imminent.
In different latest information, Canadian oil producer MEG Power (OTC: ) reported sturdy second-quarter 2024 outcomes and set a third-quarter web debt goal of $600 million. The corporate reported adjusted funds movement of C$354 million and free money movement of C$231 million. MEG Power additionally introduced a quarterly money dividend of $0.10 per share, payable in October, marking its improvement right into a mature entity within the trade.
As well as, the corporate’s bitumen manufacturing elevated by 17% over the earlier yr, averaging 100,000 barrels per day. Notably, the launch of the Trans Mountain growth pipeline is predicted to spice up MEG’s web revenue and profitability.
MEG Power additionally repurchased C$68 million of inventory and repaid $53 million of senior notes, reflecting its dedication to shareholder returns. Latest developments additionally embrace the appointment of Mike McAllister to the MEG Board of Administrators. Lastly, the Oil Sands Pathways Alliance challenge, designed to optimize manufacturing capability, is reported to be greater than 75% full.
Funding Skilled Insights
Given Scotiabank’s optimistic outlook on Meg Power, InvestingPro’s real-time information and insights additional strengthen the corporate’s monetary place and investor return potential. Meg Power presently has a P/E ratio of 12.36, which, as one in all InvestingPro Ideas highlights, is enticing when mixed with its latest earnings development. This reveals that the corporate within reason valued out there, in keeping with analysts’ valuation assessments.
One other InvestingPro Tip means that Meg Power has been actively shopping for again inventory, a transfer that might sign administration’s confidence within the firm’s worth and prospects. Inventory buybacks can even enhance earnings per share over time, probably rising investor returns.
From a monetary perspective, Meg Power has a market capitalization of $706.3 million and a gross revenue margin of 47.39% for the trailing 12 months to the second quarter of 2024. flexibility. These metrics, particularly sturdy margins, complement analysts’ views on Meg Power’s sturdy free money movement per share development potential and its attractiveness as an acquisition goal.
For traders on the lookout for a extra complete evaluation, extra investment expert Offers tricks to acquire a deeper understanding of Meg Power’s monetary efficiency and market place.
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