Q: This stock took a sizable drop since the news of acquiring Hammerhead Energy ! Would you be buying now and how long before the price starts moving back up ? Analysts seem to be on a "strong buy " ?
5i Research Answer:
We can't time any recovery but we think the very low valuation here makes a recovery possible. It will of course depend on oil prices, and investors are worried about the recent acquisition, as it is a big bet. But, it is accretive to cash flow and, while aggressive, has the potential to work out well. Most peer companies are in retrenchment mode, and CPG is becoming more aggressive. Which could work, or not, depending on the sector and the success (or lack) of the acquistion. We think it is now 'buyable' but some patience will likely be needed here.