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In a report published Monday, Dahlman Rose & Co. downgraded its rating on Southwestern Energy Company
SWN from Buy to Hold.
Dahlman Rose noted, “Thus far we have maintained a positive stance on SWN given its solid balance sheet and track record of being an efficient and low-cost producer. While the focus on development has helped maintain positive returns during a weak gas environment, we think shares have a hard time outperforming with Fayetteville production declining, barring little help from the commodity. In our opinion, SWN remains largely viewed by investors as a proxy for a more macro natural gas trade. We think this perception could be in jeopardy with the company's historical growth asset (75% of our NAV value) turning over. SWN is currently trading at 80% of our NAV estimate ($40/sh), while its gassy peer group trades at only 61%. On a EV-to-EBITDAX basis,SWN trades at 7.7x our 2013 estimate versus the gassy group at 8x.”
Southwestern Energy Company closed on Friday at $34.34.
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