NEW YORK (AP) -- Shares of Devon Energy Corp. tumbled to a 52-week low Thursday after the company posted a $719 million third-quarter loss and UBS downgraded the stock.
THE SPARK: The natural gas producer reported Wednesday that it was pulled to a loss by a $1.1 billion charge to write down the falling value of its oil and gas assets.
The price that Devon got for natural gas fell by about one-third compared with the same quarter of last year, and the drop has made the company's properties less valuable.
Excluding the charges, Devon's adjusted profit beat analysts' forecasts, but revenue was also below expectations. The company trimmed its 2012 production forecast.
THE BIG PICTURE: Falling prices have diminished the value of assets held by other gas producers, too. Last week, Chesapeake Energy Corp. reported a third-quarter loss mostly because of a $2 billion non-cash charge.
THE ANALYSIS: UBS downgraded Devon to "Neutral" from "Buy." Analyst William A. Featherston said the results, including the more conservative guidance, pointed to a dimmer outlook and raised doubts about whether Devon can hit its long-term target of 6 to 8 percent compounded annual growth.
Even with more production of oil and natural gas liquids, Devon's cash flow growth is likely to be far below that of rival companies from 2011 to 2016, Featherston wrote in a note to clients.
SHARE ACTION: The shares were down $1.33, or 2.4 percent, to $54.08 in afternoon trading after bumping to a 52-week low of $53.84 earlier in the session. In the past 52 weeks the shares hit a high of $76.34 in March.