Merrill cut Enron (ENE) to near-term neutral from accumulate, and long-term neutral from buy.
Analyst Donato Eassey says his view of the company's fundamentals or its ability to weather a long-term storm has not changed, but from a practical standpoint he believes the noise surrounding the SEC's move will outweigh any EPS analysis or net-asset value calculation. He thinks the timing and directional uncertainty of this new development will at best cap Enron's stock price in the mid-teen's while increasing overall volatility. He says trading will be event driven until the SEC decision. Eassey expects weakness in Dynergy, El Paso and Williams Cos., among others.