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Amaya and oil sector in focus at Dundee

Last updated: 16:40 16 May 2016 EDT, First published: 11:40 16 May 2016 EDT

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Amaya Inc (TSE:AYA) which reports earnings after the bell on Monday and whose stock was 14% shorted, according to Markit research, was recommended as a Buy by Dundee Capital Markets.

Dundee has the high-risk category stock on a share price target of C$24.

"We are maintaining our BUY recommendation heading into Amaya's FQ1 results expected to be released after market today. Heading into the results the shares have already discounted the probability of the $21 bid coming in from former CEO David Baazov, hence we anticipate that the update should provide the latest view from the Board on this potential bid as well as a dialogue of the process," Dundee said.

"Beyond the strategic review, we believe that investors should be focused on casino and sportsbetting cross sell progress and the potential growth from these initiatives," the broker added.

Amaya shares closed up 3.99% at C$16.73 on Monday.

For Markit story click here

In the oil sector, Dundee said Africa Oil Corp (TSE:AOI) was recommended a Buy with a share price target of C$3.25 was reiterated post-earnings, according to Dundee.

"Africa Oil's 1Q16 results were largely a non‐event, albeit confirming the receipt of farm‐in proceeds from Maersk and a resulting cash balance of just over US$0.5bn, modestly higher than our expectations on lower capex and working capital movements within the quarter."

Africa Oil Corp shares closed up 2.5% at C$2.04.

Staying in the oil sector, Athabasca Oil Corp. (TSE:ATH)  was recommended as Sell with a share price target of C$0.80 by Dundee.

Athabasca announced on Friday that is has closed on its previously announced Joint Venture with Murphy Oil Company (Not Rated), whereby Murphy acquires a 70% interest in Athabasca's Greater Kaybob area assets and a 30% interest in its Greater Placid area assets for gross proceeds of $485 million, including closing adjustments.

"The newly assumed pace of future development increases the risked upside afforded the Montney in our target price, though the play itself is not expected to be free cash positive until 2019E (under management's capex/production estimates and GLJ's April 2016 price decks). Within 2017 the incremental debt then offsets the increase in cash flow and the risked upside change to leave our target price unchanged," said Dundee.

"We remain with our SELL recommendation pending clarity on stabilized SOR's, operating costs (and diluent blending ratios) and production capacity being achieved," the broker added.

Athabasca shares closed up 9.9% at C$1.33 on Monday.

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