Alliance Oil Down as Morgan Stanley Cuts Rating: Stockholm Mover

Alliance Oil Co. (AOIL) fell to the lowest in four weeks as Morgan Stanley said the short-term earnings outlook looks weaker because of a delayed refinery upgrade and recent floods in Russia’s Far East.

Shares in the oil explorer dropped as much as 4.7 percent to 47 kronor, the lowest intraday price since Sept. 3. They declined 1.1 percent as of 11:55 a.m. local time in Stockholm, valuing the company at 9.7 billion kronor ($1.5 billion). The stock has lost 8 percent this year, compared with an increase of 16 percent in the OMX Stockholm All-Share Index.

Investors will probably stay cautious ahead of Alliance’s third-quarter results as the Moscow-based company has said floods in Russia may have constrained sales and margins Igor Kuzmin, Pavel Sorokin and Eliska Mallickova, analysts at Morgan Stanley, said in a note to clients today.

Key catalysts, such as a refinery upgrade, have also been delayed, the analysts added. They cut their rating on the stock to equal-weight from overweight and reduced the price estimate for the energy explorer to 56 kronor from 65 kronor. Alliance is scheduled to report third-quarter earnings Nov. 21.

To contact the reporter on this story: Katarina Gustafsson in Stockholm at kgustafsson@bloomberg.net

To contact the editor responsible for this story: Celeste Perri at cperri@bloomberg.net

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