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On Wednesday, Raymond (NSE:RYMD) James made a notable change to the stock rating of Peyto Exploration & Development Corp. (PEY:CN) (OTC:PEYUF). Analyst Luke Davis downgraded the company from Outperform to Market Perform, setting a price target of Cdn$21.00. This adjustment follows a significant appreciation in Peyto’s share value, which has seen an 18% increase since the firm initiated coverage a little over a month ago.
Davis acknowledged Peyto’s strong performance over the past quarter and the company’s confirmation of its 2025 outlook. Despite the positive results and the belief that Peyto will continue to thrive in a volatile macroeconomic environment, the analyst suggests that the current success may already be reflected in the stock’s price, prompting the downgrade.
Peyto’s operational momentum remains strong, according to Davis, who also highlighted the company’s potential to optimize throughput due to spare processing capacity within its portfolio. He commended Peyto for its status as the lowest-cost gas producer in the basin and for having the most robust hedge book among its peers covered by Raymond James.
In conclusion, while Davis continues to favor Peyto’s business narrative, he recommends investors seek a more opportune moment to invest, as he sees greater upside potential in other companies within the industry. The new price target of Cdn$21.00 stands as the current valuation benchmark for Peyto shares according to Raymond James.
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