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On Wednesday, Canaccord Genuity revised its stance on Peyto Exploration & Development Corp. (PEY:CN) (OTC:PEYUF), downgrading the stock from Buy to Hold, yet maintaining its price target at Cdn$20.00. The adjustment in rating comes after Peyto’s stock displayed a strong performance over the past three months, positioning it as the top performer within Canaccord Genuity’s exploration and production coverage universe during that period.
The research firm’s analyst cited Peyto’s status as a top-tier operator and skilled marketer of its product as ongoing strengths. However, the decision to lower the rating to Hold was based on the stock’s relative valuation. Despite the downgrade, the firm’s price target remains unchanged, indicating a continued belief in the company’s value.
Canaccord Genuity’s price target for Peyto is grounded in a 5.7x 2025 estimated enterprise value to debt-adjusted cash flow (EV/DACF) multiple. This target comes at a time when Peyto’s stock is trading at a 5.6x multiple based on the same 2025 estimates, closely aligning with Canaccord’s valuation. This compares to the peer group average, which stands at a 4.3x multiple.
The hold rating reflects a more cautious outlook on the stock’s near-term appreciation potential, given its recent market performance. Canaccord Genuity’s assessment implies that while Peyto remains a solid company, its stock price may have limited room for growth in the immediate future compared to its peers.
Investors and market watchers will likely keep an eye on Peyto’s stock as it adjusts to the new rating and to see if the company can continue to outperform its peers and justify its current valuation. The unchanged price target suggests that Canaccord Genuity still sees long-term value in the company, despite the short-term adjustment in its stock rating.
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