Canaccord trims Vaalco target price as investment programme delays cash flow uplift

(Sharecast News) - Canaccord Genuity cut its target price on Vaalco Energy to 765p from 800p on Monday, reflecting updated production guidance and a more cautious long-term outlook for the group's Etame asset in Gabon.

The Canadian bank, whih retained its 'buy' recommendation on the stock, said Vaalco's third-quarter results were solid operationally, with working-interest production rising 21% quarter-on-quarter to 25,300 barrels of oil per day, driven by progress in Côte d'Ivoire and Egypt. However, it said the financial benefits of the company's heavy investment programme were yet to fully materialise, with sales volumes increasing by a more modest 4%.

Canaccord Genuity expects a more meaningful uplift in earnings and cash flow from the fourth quarter onwards as production from the Baobab field ramps up and recent investment across Côte d'Ivoire, Egypt and Gabon begins to feed through into financial performance.

In the near term, however, elevated capital expenditure continues to weigh on the balance sheet, with net debt increasing to $188m at the end of September from $147m three months earlier, while liquidity fell to $112m from $153m.

Canaccord also noted that Vaalco had trimmed the upper end of its 2026 production guidance range, although it said this was partly offset by lower expected capital spending.

Looking further ahead, Canaccord said Egypt remained the standout performer in 2026, while Côte d'Ivoire was expected to drive production growth in 2027. It also forecasts a return to positive free cash flow from around spring 2027, accelerating in the second half of the year.

Reporting by Iain Gilbert at Sharecast.com