UPDATE: Mizuho Securities Downgrades Bill Barrett Corporation to Neutral, Lowers PT on Crude Oil Prices Outlook

In a report published Tuesday, Mizuho Securities analyst Jeffrey Connolly downgraded the rating on

from Buy to Neutral, and lowered the price target from $20.00 to $11.00. In the report, Mizuho Securities noted, “We are downgrading BBG to Neutral from Buy and lowering our price target to $11/share from $20/share based on our outlook for lower crude oil prices and concerns about the balance sheet in 2015. We are cutting our 4Q14 and 2015 estimates on lower commodity prices, as well. While a strong hedge book (~75% of est. 2015 oil volumes hedged at ~$87.50) should mitigate the impact of lower prices in 2015, we forecast net debt to EBITDA increases to 2.8x at YE15 from 1.9x at YE14. Assuming a flat rig count in the DJ and Uinta, we estimate capex declines to ~$525 mm in 2015 from ~$568 mm in 2014. However, a cash flow outspend of ~$295 mm burns through available liquidity of ~$644 mm at 3Q14 (~$295 mm in cash and ~$349 mm undrawn on credit facility). Given BBG's focus on preserving the balance sheet, we see risk to the downside for the drilling program and production growth in 2015.” Bill Barrett Corporation closed on Monday at $9.90.