Zacks Investment Research downgraded shares of Statoil ASA – ADR (STO) from OUTPERFORM to NEUTRAL on September 19, 2014, with a target price of $30.00.
We are downgrading our recommendation on Statoil ADRs to Neutral from Outperform. The company posted lower-than expected earnings and revenues in the second quarter. The fall is mainly attributable to decrease in liquids and gas sales volumes and margins. However, Statoil boasts of a strong balance sheet, exited from low-profit generating operations and broadened its international asset base. The addition of new projects is expected to produce a CAGR growth rate of 2% – 3% annually during the 2014 to 2016 period. While the company is fairly active in its development operations, we advise to remain on the sidelines. As hiccups remain in the company's production growth in the short term, we expect Statoil to perform on par with the broader market.
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