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What Analysts Are Saying About Linn Energy

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Two Wall Street firms commented on Linn Energy LLC (NASDAQ: LINE) recently following its Q4 results.


In a note issued on February 20, Credit Suisse analysts led by Abhiram Rajendran remained Neutral on the stock and commented that leverage remained too high even when modeling long-term crude levels at $70/bbl and natural gas at $4/mcf.

Recapping the company's outlook, Rajendran noted that Linn expected to spend $520 million on oil and gas capital expenditures in 2015, "a further 29 percent reduction from its prior $730 million estimate."

Related Link: Barclays: Oil Bulls 'Need To Be Cautious'

According to Rajendran, guidance for the new capital budget implied "a 65 percent reduction from the ~$1.5Bn spent in 2014." 2015 natural gas production was also expected to decline 5 percent from 2014 while Q1 capex was estimated at $190 million.

Credit Suisse maintained a $12 price target but Rajendran could not recommend the stock due to its outlook for oil and gas prices.

Barclays analysts, led by Jeffrey W. Robertson, also commented on the stock in a note issued February 24.

Similar to the Credit Suisse analysts, Robertson noted that the "revised capital program incorporates a steady reduction in drilling through the year, which will likely result in a declining production profile."

"While its liquidity remains adequate," Robertson believed Linn Energy's "rising leverage ratios could continue to impact capital spending and the distribution."

Focusing on the company's balance sheet, the analysts noted that as of December 31, Linn "had ~$10.3 billion of net debt and ~$2.2 billion of total liquidity. Assuming constant capital spending and distributions over the next three years," the analysts estimated "net debt to LTM EBITDAX ratios could increase to 6.8x by YE15 and 7.1x by YE16 as higher priced hedges roll off and cash flow declines."

Robertson cut the price target on the stock from $10 to $9 and maintained an Equal Weight rating.

An upside scenario in Robertson's view, however, would see the stock at $12 with the assumption that 2016 NYMEX oil and gas prices were 10 percent higher than the current assumptions of $65/bbl and $3.50/MMBtu.

Linn Energy LLC recently traded at $11.97, up 0.05 percent.

Latest Ratings for LINE

DateFirmActionFromTo
Mar 2016Goldman SachsTerminatesSell
Feb 2016Wells FargoDowngradesMarket PerformUnderperform
Feb 2016CitigroupDowngradesNeutralSell

View More Analyst Ratings for LINE
View the Latest Analyst Ratings

Posted-In: Abhiram Rajendran Barclays Credit SuisseAnalyst Color Price Target Commodities Markets Analyst Ratings

 

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