On Friday, Energean Oil & Gas (ENOG:LN) (OTC: EERGF) received a rating downgrade from Berenberg. The firm shifted its stance on the energy company's stock from Buy to Hold and adjusted the price target to GBP10.45, a decrease from the previous GBP11.75.
The revision was prompted by the assessment that Energean's near-term growth prospects, particularly in its operations in Israel and Greece, are now adequately reflected in the stock's current price. Despite acknowledging Energean's strong long-term cash flow, supported by gas sales contracts with floor pricing, Berenberg anticipates this will mainly contribute to steady returns for shareholders and a reduction in net debt starting from 2027.
Berenberg's analysis also led to a reduction in Energean's production forecasts for the years 2025 and 2026 by 2% and 10%, respectively. This adjustment has a cascading effect on the revenue and EBITDA projections for the same periods, with anticipated decreases of 5% and 13% in revenue and 8% and 15% in EBITDA, correspondingly.
Additionally, the investment firm has revised its long-term dividend expectations for Energean, lowering the assumption from $1.80 to $1.60 per share. This new dividend forecast is designed to facilitate a trajectory towards the company's leverage target of 1.5 times. Despite the downgrade, Berenberg still sees a potential upside of just under 6% from the current share price to the new price target of 1,045 pence.
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