Pioneer Southwest (NYSE:PSE) Plummets after UBS (NYSE:UBS) Downgrade

UBS (NYSE:UBS) downgraded Pioneer Southwest Energy (NYSE:PSE) from "Neutral" to "Sell," pushing the share price of the company down Wednesday.

UBS analyst Ronald J. Barone said, "With a portfolio of long-lived, slow decline assets, diverse commodity exposure, significant hedge positions, and a close affiliation with Pioneer Natural Resources (PXD), we have long considered PSE a high-quality upstream MLP. Its consistent, strong performance through varied market conditions since its IPO underscores the benefits of its structure and asset profile. However, PSE units are up - 38% y/y and - 24% YTD and trade with a yield that is 1 STD below its historic average; at these levels, we see downside risk and are downgrading to Sell, from Neutral.

"With superior distribution coverage (1.23x YTD), a very successful acquire and exploit track record, dominant size/scale, and game changing opportunities in the Granite Wash, we believe Linn Energy (Nasdaq:LINE) presents an attractive alternative for investors. In fact, LINE ($34 PT) is our top pick for new money in the upstream MLP space," UBS said in a note to clients.

UBS maintained a price target of $23 on Pioneer Southwest Energy.

Pioneer closed Wednesday at $26.37, down $1.58, or 5.65 percent. Linn Energy closed at $30.27, gaining $0.09, or 0.30 percent.