Desjardins Downgrades NuVista Energy, Lowers Natural Gas Price Forecast

Desjardins Securities analysts have lowered their commodity price forecasts, particularly for natural gas, resulting in two rating downgrades and one upgrade in the Canadian energy sector. NuVista Energy Ltd. was downgraded to "hold" from "buy" with a price target cut to C$17 from C$17.50. The changes were made in conjunction with reviewing Q2 results from producers.

Desjardins Securities analysts have recently revised their commodity price forecasts, particularly for natural gas, which has resulted in significant changes in the Canadian energy sector. The adjustments were made following a review of the second-quarter results from producers.

NuVista Energy Ltd. (NVA-T) was downgraded to "hold" from "buy" with a price target cut to C$17 from C$17.50. The downgrade is partly driven by the reduced natural gas price forecast, which has impacted the company's 2026 free cash flow generation relative to peers. The company's reliance on third-party infrastructure has also been a point of frustration, leading to temporary production curtailments in the second quarter of 2025 [1].

The downgrade comes as Desjardins Securities has become more cautious about natural gas prices due to elevated production in both Canada and the U.S. The analysts have slashed their 2025–26 NYMEX price forecast to US$3.50/mcf and US$4.00/mcf, from US$3.75/mcf and US$4.50/mcf, respectively. This adjustment has significantly reduced the AECO forecast for NuVista Energy [1].

Spartan Delta Corp. (SDE-T) was also downgraded to "hold" from "buy" with a price target of C$5.75. The downgrade is due to the expected subdued cash flow generation with the new commodity price forecast. The company's capex-adjusted payout ratio for 2026 is now calculated to be 138%, which could force the company to throttle development activity or seek additional capital [1].

Conversely, Whitecap Resources Inc. (WCP-T) was upgraded to "buy" from "hold" with a price target raised to C$12.50 from C$12. The upgrade is based on the company's positive financial results and estimate revisions, which have shown resilience in a softer commodity price environment. The analysts have gained better comfort in the company's ability to sustain its annual dividend and have recognized the potential for continued outperformance [1].

Overall, Desjardins analysts remain biased toward large-cap producers in a softer commodity price environment, highlighting Suncor Energy (SU-T), Cenovus Energy (CVE-T), and Topaz Energy (TPZ-T) as top picks [1].

References:
[1] https://www.theglobeandmail.com/investing/markets/inside-the-market/article-tuesdays-analyst-upgrades-and-downgrades-258/