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Investing.com - BMO Capital downgraded Lycos Energy (TSX:LCX) from Outperform to Market Perform and lowered its price target to C$1.50 from C$2.50 on Thursday.
The downgrade follows Lycos Energy’s recent announcement of a C$60 million asset disposition, with proceeds allocated to fund a C$0.90 per share dividend for shareholders.
This transaction comes after the company’s earlier divestiture of its Saskatchewan assets, signaling a strategic shift as Lycos enters what BMO describes as a "rebuild phase."
BMO Capital acknowledged Lycos’s reputation as "a pioneer in developing innovative drilling concepts to boost well profitability," including techniques such as fishbone drilling.
While the investment firm expressed confidence in management’s ability to "discover new oil plays," it cited concerns about "plenty of risk on timing and success" during this transitional period as justification for the rating change.
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