Research firm Macquarie Equities Research lowered its recommendation for junior oil and gas company Cequence Energy (CQE:TSX) to NEUTRAL from OUTPERFORM and increased its target share price to C$4.50. The company's stock opened at C$3.28 on Tuesday and closed at C$3.27 on Monday, August 22. In the last 52 weeks, the stock has hit a low of C$1.53 and a high of C$4.24.

The decision to downgrade was primarily based on Macquarie's assessment that a significant portion of the upside potential has already been priced into the stock. The shares are already trading at a 7.7x multiple to 2012 estimated EV/DACF, which is above the average multiple of 5.4x for the company's peers. The high EV/DACF multiple contributed to the increase in Cequence's target share price to C$4.50.

Cequence has been one of the best performers among the small-to-mid-cap oil and gas stocks, yielding 102 percent over the last year. The company has boosted its capital expenditures for this year to C$150 million, and is expected to increase production 22 percent between now and the same time in 2012.