Morgan Stanley Downgrades CNQ To EW, Raises Target To $49

Morgan Stanley is downgrading Canadian Natural Resources (NYSE: CNQ) to EW.

“While we are increasing our price target in association with this move (to C$49 from C$45), due to modest de-risking of our NAV (from incremental oil sands growth), we are downgrading CNQ, due to what we see as a more balanced (and commodity sensitive) risk/reward profile from current levels,” Morgan Stanley writes.

“We see 11% upside to our revised base case and 16% downside to the bear case (which assumes a long-term oil price of $80/bbl). We remain very positively disposed toward CNQ for its world-class assets and management team.”

“But,” Morgan Stanley adds, “we see a narrower margin of safety today than we did in early 2010, as start-up operational issues at Horizon look to be resolved, and we think the value of CNQ's backlog of oil resource is better reflected by the stock price today.”

Canadian Natural Resources closed Tuesday at $44.15.