News Breaks
May 6, 2013
12:34 EDT LINE, LNCO Linn Energy retreats after Barron's highlights concerns
Shares of Linn Energy (LINE) are dropping after this weekend's Barron's magazine alleged that the company's fundamentals have weakened. Some investors contend that the company's earnings have been deceptive, the publication added. Meanwhile, a separate stock spun off by Linn Energy, LinnCo (LNCO), is also declining. WHAT'S NEW: Some investors have questioned Linn Energy's accounting methods, Barron's stated. Moreover, the company's energy production didn't increase last quarter and it didn't make enough money last quarter to cover the cost of its distribution to investors, according to the publication. The stock could tumble if the company ever reduces its payout to investors, Barron's contended. ANALYST REACTION: In a note to investors, Wells Fargo wrote that Barron's overstated the impact of the company's accounting methods on its cash flow. Moreover, Wells contends that the article focuses on issues that have previously been disclosed. Linn Energy's distribution is secure, added the firm, which maintained an Outperform rating on Linn Energy and LinnCo. TODAY'S PRICE ACTION: In early afternoon trading, Linn Energy dropped 7% to $35.10, while LinnCo gave back 7% to $38.90.