On Friday, BofA Securities revised its stance on Capricorn Energy PLC (LON:CNE:LN) (OTC: CRNCY (OTC:CRNCY)), downgrading the stock from Buy to Underperform. The firm also adjusted the price target to GBP1.95 from the previous GBP2.15. This shift follows the company's first-half 2024 results, which indicated a robust operational performance and reduced cash costs.
Capricorn Energy's production for the first half of the year exceeded expectations, averaging 25,000 barrels of oil equivalent per day (boe/d), surpassing the company's full-year guidance of 20,000 to 24,000 boe/d.
The operational expenses are now anticipated to be under $6 per boe, a decrease from the earlier forecast of $7 to $9 per boe. This improvement has been attributed to favorable foreign exchange movements in Egypt.
The company's ability to collect receivables has shown progress, contributing to the firm's positive business momentum. This comes as a significant development after previous challenges in Egypt. Despite these positive operational metrics, BofA Securities has revised its outlook due to a lower projected oil price for the second half of 2024 through 2025. This new forecast has resulted in an 18% reduction in the estimated EBITDA for 2025.
The downgrade reflects BofA Securities' assessment of Capricorn Energy's stock performance, which has significantly outperformed its peers in 2024. The new price target of GBP1.95 represents a downward revision from the former target of GBP2.15, leading to the current Underperform rating.
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