Banc of America downgraded El Paso (EP) to sell.
On Thursday the energy company announced $950 million to $1.3 billion in fourth quarter charges, delayed its fourth quarter release, and cut its dividend. Analyst William Maze say the company's financial condition continues to deteriorate due to moribund wholesale energy markets and rating agency pressure in the wake of the Enron debacle.
Maze says, with asset sales, it appears El Paso can endure through 2003, but he says he has serious doubts about its ability to generate positive cash flow in 2004 and beyond. He notes the company also faces potential liability from a California investigation, and uncertainty over bank cooperation on important credit lines.
He cut the $1.40 2002 earnings per share estimate to $1.36, and cut the $1.00 2003 estimate to 84 cents. He also slashed the $1.02 2004 target to 81 cents.