UPDATE: Goldman Sachs Downgrades The Williams Companies to Buy, Lowers PT Following Removal from Conviction List

In a report published Tuesday, Goldman Sachs analyst Theodore Durbin downgraded the rating on

from Conviction List-Buy to Buy, and lowered the price target from $45.00 to $40.00. In the report, Goldman Sachs noted, “We believe the June 13 explosion at WPZ's Geismar chemical plant in Louisiana adds material risk to the near-term growth profile of both WMB and WPZ. Our sensitivity analysis implies WPZ DCF/coverage and WMB EBIT/EPS could have 5-21% downside depending on the duration and severity of the outage, which could put dividend growth targets at risk. We believe WPZ could mitigate the impact via a reduced distribution growth rate, IDR waivers, or slower capex, while WMB could add debt in Canada, reduce its dividend growth rate, or issue equity. Insurance proceeds will likely also pay for repairs and recover lost margins. Even assuming an outage that lasts into 2014 with no insurance proceeds, we believe WMB could hit a 10% dividend CAGR by 2014. We remain bullish on WMB's fundamental positioning, including a growing presence in the Marcellus/Utica shales, leverage to increased GP cash flows at WPZ and ACMP, and upside from Canadian gas processing, deepwater, the “Bluegrass” NGL pipeline, and gas-fired power demand.” The Williams Companies closed on Monday at $33.64.