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Novatek Drops to 14-Month Low as Bank of America Cuts Rating

OAO Novatek, Russia’s second-largest natural-gas producer, fell to its lowest price in more than 14 months after Bank of America Corp. cut the stock to neutral from buy, citing a government plan to raise taxes.

Novatek sank 3.6 percent to 328.52 rubles in Moscow trading, its weakest close since February 2011. The company’s London traded stock lost 1.7 percent to $111.10. Bank of America cut its price estimate to $130 a share.

The shares sank as much as 11 percent yesterday after Deputy Finance Minister Sergei Shatalov said the government approved quadrupling the mineral-extraction tax.

“While the decision is not final and we continue to believe in growth prospects over the next year for Novatek, we downgrade the stock to neutral pending a final decision by the Russian government and further catalysts,” Bank of America analysts, led by Karen Kostanian, said in an e-mailed report today.

Independent gas producers, which include Novatek and oil companies, will pay 1,049 rubles per 1,000 cubic meters of gas produced in 2015, compared with 251 rubles this year, Shatalov told reporters in Moscow yesterday after a government meeting.

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