Canaccord Downgrade Comments that asset disposition # is so ridiculously high that i think the only thing they CAN do now is sell the entire company in pieces...hopefully that process is well underway with Icahn and his boardmembers in the driver's seat
------
The revised outlook on oil prices resulted in Canaccord cutting price targets for energy stocks it covers by an average of 12 per cent.
And there were two notable downgrades: Talisman Energy Inc. and Baytex Energy Corp. Ratings on both were lowered to "hold" from "buy."
Talisman took the biggest hit in Canaccord's fresh look at the energy sector, with its price target slashed to $5 (U.S.) from $13, partly because the company may now be forced into selling more assets to take the pressure of its balance sheet.
"While we believe a sale of Marcellus midstream assets is likely to be sold by year-end, with possibly a surprising price tag, current oil prices are putting further pressure on the company to possibly look to sell more assets: To that end, if oil prices average $70/barrel WTI in 2015, we believe the company needs to sell about$4.0-4.5 billion of assets vs. the $2-billion that it currently plans. At this commodity price forecast, before asset sales, we estimate the company would see its debt/cash flow end up at over 4x. Therefore, in order to get it back down to a respectable 1.5x, the company would need to sell our aforementioned amount," said Canaccord analyst Phil Skolnick.
But the current market will make selling assets for a good price a challenge, he added. And the current geopolitical environment will make offloading its Kurdistan assets especially difficult.
As such, Mr. Skolnick says "a dividend cut is very likely in order."
"Once the dust settles post this market meltdown, we believe investors will gravitate towards the fundamentally strong companies that once again look cheap; and we believe TLM is not one of those," he said.