NEW YORK (AP) -- Linn Energy LLC shares rose Wednesday after a Goldman Sachs analyst said that the oil and gas company's shares are trading significantly below their fair price.
THE SPARK: Analyst Theodore Durbin upgraded Linn to "Buy" with a $36 price target. He said that even taking into account the company's recent problems the recent sell off of its shares wasn't warranted and creates an attractive entry point for investors.
THE BIG PICTURE: Linn shares have lost about 25 percent of their value since the beginning of July, when the company said it was being investigated by the Securities and Exchange Commission.
Linn said at that time that the SEC had asked it to save documents and communications that may be relevant to its affilate LinnCo LLC's proposed acquisition of Berry Petroleum Corp. as well as Linn Energy and LinnCo's use of adjusted financial measures and a hedging strategy.
Linn Energy said in February that it planned to buy Berry, a drilling company, for stock worth about $2.5 billion. The company's put the deal's value at $4.3 billion, including debt.
THE ANALYSIS: Durbin, who also upgrade LinnCo LLC to "Buy" with a $37 price target, said the worries about the SEC investigation and the acquisition are overblown.
He said that the drop in the company's share price gives investors a chance to own a stake in a quality master limited partnership with stable cash flows, solid production and several possibilities for growth.
THE SHARES: Up $1.92, or 7.7 percent, to $26.93 after peaking at $27.25 earlier in the session. Over the past 52 weeks, the company's shares have traded between $20.35 and $42.57.