UPDATE: Goldman Sachs Downgrades LinnCo LLC to Neutral, Reiterates $35 PT as Catalysts are Realized

In a report published Tuesday, Goldman Sachs analyst Theodore Durbin downgraded the rating on LinnCo LLC LNCO from Buy to Neutral, but reiterated the $35.00 price target. In the report, Goldman Sachs noted, “We downgrade Linn Energy (LINE/LNCO) from Buy to Neutral following realization of multiple catalysts. Since being added to the Buy list on 7/17, LINE/LNCO are +27%/+15% versus the SPX +5% and the AMZ -1%. We believe most of the original catalysts that drove our Linn upgrade have now largely passed. We thought the sharp sell-off in units/shares following announcement of an SEC inquiry, market concerns over its hedge accounting and maintenance capex, and fears over the Berry (BRY) acquisition were overdone. Over the last 3-4 days, Linn has announced (1) it expects no further comments from the corporate SEC division on its S-4 filing, which we believe alleviates many of the accounting concerns, and (2) a revised, 34% higher offer for BRY. With these catalysts now passed, a higher BRY bid, an ongoing regional SEC division inquiry, and lingering questions around production growth versus capital intensity, we believe investors have now realized much of Linn's previously deeply discounted value, and see more balanced risk/reward. We believe the next leg up now requires improved operational results and additional accretive M&A, two potential but longer-term and more difficult catalysts to realize value.” LinnCo LLC closed on Monday at $33.36.