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Investing.com - Raymond (NSE:RYMD) James initiated coverage on Gran Tierra Energy (NYSE:GTE) with a Market Perform rating and a price target of Cdn$10.00 on Friday. The energy company, currently valued at $211 million in market capitalization, trades at an EV/EBITDA multiple of 2.6x based on its last twelve months EBITDA of $342 million.
The energy company’s recent repositioning and entrance into the Canadian market provides "a platform for differentiated growth across multiple plays combined with geographic diversification," according to Raymond James.
The firm noted that Gran Tierra’s acquisition of i3 Energy has resulted in elevated financial leverage, which "to some degree limits near-term development potential" for the company.
Raymond James indicated that if oil pricing maintains current levels or if management executes a significant divestment, there could be "a path to outsized relative returns alongside deleveraging" for Gran Tierra.
The firm expressed a preference for gas-weighted equities given "an increasingly tight North American market," while acknowledging that "integration and balance sheet improvement will likely be the primary investor focus for the foreseeable future."
In other recent news, Gran Tierra Energy reported a significant boost in its first-quarter 2025 performance, highlighting a 14% rise in average working interest production and a reduction in net loss from $34 million to $19 million. The company also achieved an 8% year-over-year increase in revenue from oil sales, totaling $171 million, alongside an increase in adjusted EBITDA to $85 million. Additionally, Gran Tierra has entered into an agreement to sell its North Sea unit to NEO Energy for $7.5 million, marking a strategic exit from the North Sea to streamline operations and focus on its asset portfolio in Canada, Colombia, and Ecuador.
Stifel Canada analysts initiated coverage on Gran Tierra with a Buy rating and set a price target of C$10.00 per share, citing the company’s diversified and high-growth portfolio as an attractive opportunity for investors. The analysts believe that Gran Tierra’s stock does not fully reflect the value of its successful drilling campaigns in Ecuador, Canada, and Colombia. Furthermore, Gran Tierra continues to focus on debt reduction, having decreased its gross debt by $27 million in the first quarter, supported by a robust cash balance and new credit facilities.
Operationally, Gran Tierra successfully drilled two additional oil discoveries in Ecuador and completed two lower Montney wells in Canada, demonstrating strong early production performance. The company remains committed to its drilling program and regional development, with plans to continue exploration and production activities in its key markets. These developments reflect Gran Tierra’s strategic approach to enhancing shareholder value while maintaining resilience amid commodity price volatility.
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