On Thursday, BMO Capital Markets reinstated coverage on Parex Resources Inc. (PXT:CN) (OTC: PARXF) stock with a Market Perform rating, setting a price target of C$13.00.
The firm highlighted the challenges faced by Canadian-listed exploration and production companies operating in Colombia, such as government regulation, drilling exploration risk, and social unrest, which have prompted a cautious approach among investors.
The analyst pointed out that despite Parex's history of success, its recent performance has been marred by disappointing production results. This development is likely to keep investors on the sidelines due to the prevailing uncertainty surrounding the company's prospects for 2025, including pending well results.
Moreover, the firm noted that while the current valuation of Parex Resources may seem low, factors such as insider buying and the potential for high deliverability exploration areas could offer significant upside for investors willing to take on higher risks. The coverage reinstatement comes with an expectation of a neutral performance in the near term, as reflected in the Market Perform rating.
Parex Resources Inc., which is traded on the Canadian stock exchange and over-the-counter markets, has been under scrutiny due to the various challenges inherent in the Colombian energy sector. The BMO Capital Markets' assessment suggests a cautious but potentially rewarding approach for those considering investment in the company.
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