Zacks Investment Research downgraded shares of Anadarko Petroleum Corporation (APC) from NEUTRAL to UNDERPERFORM on January 30, 2015, with a target price of $73.00.
Anadarko Petroleum derives more than half of its revenues from sales of oil and condensate. Global supply of crude oil is mounting while demand for the same is not increasing at the same pace, resulting in supply glut and leading to a free fall in oil prices. In the past one year, crude oil prices have plunged by more than 50% and still show signs of weakening. Moreover, the negative earnings estimate revision activity of Anadarko has led to a decline in the fourth quarter and full year 2014 Zacks Consensus Estimate. In spite of Anadarko's efforts to expand its oil reserves by undertaking large scale drilling projects, its top and bottom line will be under pressure given the strong headwinds. Thus, we are downgrading our recommendation to Underperform on the stock.
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