Tuesday’s analyst upgrades and downgrades
Analysts have adjusted their ratings on ARC Resources following Shell's $22-billion acquisition announcement, with several citing fair valuation and limited chances for competing bids. Some analysts view the deal as strategically beneficial for Shell, particularly in relation to its integrated natural gas operations and potential LNG Canada Phase 2 development. Meanwhile, Telus Corp. received a rating upgrade to "buy" due to improved industry pricing discipline and expected positive developments on capital spending and asset sales.
- ▪TD Cowen analyst Aaron Bilkoski downgraded ARC Resources to "sell" from "hold," citing fair valuation and low probability of competing bids.
- ▪The acquisition implies a price of $32.80 per share, aligning with midcap E&P peer metrics and offering a 10% 2027 sustaining free cash flow yield.
- ▪BMO's Randy Ollenberger downgraded ARC to "market perform," noting Shell is getting a good deal given ARX’s scale and high-quality assets.
- ▪ATB Cormark’s Patrick O’Rourke changed his rating to "tender," highlighting synergies with Shell’s natural gas business and strong value realization.
- ▪TD Cowen’s Vince Valentini upgraded Telus Corp. to "buy" due to improved pricing discipline and anticipated positive news on capex and non-core asset sales.
Opening excerpt (first ~120 words) tap to expand
ShareSave for laterPlease log in to bookmark this story.Log InCreate Free AccountInside the Market’s roundup of some of today’s key analyst actionsTD Cowen analyst Aaron Bilkoski thinks Shell plc’s (SHEL-N) $22-billion deal to acquire ARC Resources Ltd. (ARX-T) “fairly values” the Canadian company under his current commodity price outlook. While he acknowledges the possibility of competing offers, he seems other bids as “a low probability event,” leading him to move his rating for ARC shares to “sell” from “hold” previously.“The implied acquisition price of $32.80 equates to transaction metrics of 5.6 times 2027 estimated EV/DACF [enterprise value to debt-adjusted cash flow] or a 10-per-cent 2027 sustaining FCF [free cash flow] yield,” he explained.
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