Wednesday, June 2, 2010

UBS (NYSE:UBS) Cuts Anadarko (NYSE:APC) Price Target While Maintaining "Buy" Rating

UBS (NYSE:UBS) heavily cut their price target for Anadarko Petroleum (NYSE:APC), dropping it from $68 to $86, although they maintained their "Buy" rating on the company in spite of that.

A UBS analyst said, "Since the tragic explosion of the Deepwater Horizon rig on April 20, APC shares have lagged its large cap E&P peer group by 31%, inferring an $11.2 billion net liability for cleanup and legal costs associated with the Macondo oil spill."

UBS noted that the stock was trading at a 40 percent discount to their NAV estimate for proven reserves.

Anadarko has a 25 percent exposure to the Deepwater Horizon oil well, owning 25 percent of the rig itself.

It seems the liability is starting to be understood, and in a worst case scenario the stock NAV would be $68 a share.

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