Shares of oil and gas production company Breitburn Energy Partners LP (NASDAQ:BBEP) and upstream energy company Linn Energy LLC (NASDAQ:LINE) have been under pressure, dropping 35% and 10.50%, respectively, in the last three days’ trading. Adding insult to injury, UBS and FBR Capital analysts slashed their price target for the stocks, while reiterating negative ratings.
Breitburn Energy Partners LP
In a research report released today, UBS analyst Shneur Gershuni reiterated a Sell rating on shares of BreitBurn, while reducing the price target to $1.50 (from $2.25), after the company announced that it has elected to suspend the distribution on its Common Units, effective immediately.
Gershuni noted, “BBEP has elected to suspend its $0.125/unit quarterly distribution due to continued uncertainty in the outlook for commodity prices. Management intends to reallocate the cash flow towards capex projects and debt reduction. With the forward curve for WTI and natural gas currently trending below UBSe for 2016/2017 we see potential risk of leverage remaining elevated and potentially increasing. For this reason we are pushing out our estimate for a reinstatement of distributions.”
According to TipRanks.com, which measures analysts’ and bloggers’ success rate based on how their calls perform, analyst Shneur Gershuni has a total average return of 0.3% and a 50.0% success rate. Gershuni has a 37.1% average return when recommending BBEP, and is ranked #2129 out of 3644 analysts.
Linn Energy LLC
In a research note released yesterday, FBR Capital analyst Chad Mabry reiterated an Underweight rating on shares of Linn Energy and reduced the price target to $1.50 (from $2.00), which represents a potential downside of 17% from where the stock is currently trading.
Mabry stated, “Linn Energy recently closed a series of note exchanges as it seeks to lower leverage and position for a lower-for-longer commodity price outlook. While the transactions are a step in the right direction, we still see substantial macro headwinds for the company, which are likely to prevent additional material progress on this initiative. Meanwhile, LINE’s proved reserve value remains well below its debt, and we do not foresee the company reinstating a distribution in the near term. As such, we see minimal residual value for unit holders—absent a meaningful recovery in commodity prices —and are reducing our price target to $1.50.”
According to TipRanks.com, analyst Chad Mabry has a total average return of -38.4% and a 18% success rate. Mabry has a 29.9% average return when recommending LINE, and is ranked #3640 out of 3644 analysts.
Out of the 4 analysts polled by TipRanks in the last 3 months, 3 rate Linn Energy stock a Hold, while one rates it a Sell. With a return potential of 29.44%, the stock’s consensus target price stands at $2.33.