NEW YORK (AP) -- Shares of Forest Oil Corp. were among the biggest percentage declining stocks on the New York Stock Exchange Monday after an analyst expressed doubts in the company's ability to turn itself around amid falling commodity prices.
THE SPARK: Stifel Nicolaus analyst Amir Anif cut shares of the Denver-based natural gas and oil producer to "Hold" from "Buy." He notes the company's high debt and spending levels combined with strong exposure to falling oil and natural gas prices will prevent the stock from significantly recovering from its current level, barring a company sale or recovery in energy prices.
THE BIG PICTURE: Despite some short-lived bumps, the price of oil has dipped steadily recently, mostly on European economic concerns. It's down by 25 percent in the last two months. A glut of natural gas has left prices near a decade low.
THE ANALYSIS: Anif believes the tenants of the company's "Buy" rating — like an expected joint venture in rich oil and gas fields that should have been the drivers of Forest's turnaround — have not gone well. Forest's most recent quarterly results showed lower initial production from new wells. This was underscored, he said, by the departure of the company's CEO last month and its chief operating officer in May.
SHARE ACTION: Forest Oil shares lost 5.5 percent, or 40 cents, to $6.93 in afternoon trading. It's ranged from $6.22 to $28.22 in the last 52 weeks.