CIBC World Markets Inc. reiterated its top large-cap picks as Suncor Energy Inc. (TSX: SU.TO) (NYSE: SU), Talisman Energy Inc. (TSX: TLM.TO) (NYSE: TLM), Canadian Natural Resources Ltd. (TSX: CNQ.TO) (NYSE: CNQ), and Nexen Inc. (TSX: NXY.TO) (NYSE: NXY) in the oil and gas sector.
The brokerage expects return potential at the 50% level for the group as a whole in its coverage universe.
CIBC cut its price target on Suncor to $43 from $45 and EnCana Corp. (TSX: ECA.TO) (NYSE: ECA) to $30 from $32 to reflect minor changes to its Risked NAV. "Overall, we continue to view Suncor as our top pick in the Large Cap E&Ps peer group with the company trading at 66% of Risked NAV," the brokerage wrote in a note.
The brokerage also slashed its production estimates for Talisman on the back of a reduced rig count in the Montney and Marcellus. "We now forecast TLM to produce 454,954 boe/d in 2012e (8% Y/Y growth) with a 56% weighting to natural
gas. We maintain our SO rating and US$23 target," it said.
MEG Energy Corp. (TSX: MEG.TO) and Athabasca Oil Sands Corp. (TSX: ATH.TO) remain its top picks in the oils sands, CIBC said.