UPDATE: Anadarko Petroleum (APC) Updated to Buy at Goldman Sachs; Analyst Sees 41% Upside

(Updated - March 11, 2016 10:13 AM EST)

Goldman Sachs upgraded Anadarko Petroleum (NYSE: APC) from Neutral to Buy with a price target of $58.00 (from $50.00), implying 41% upside. Analyst Brian Singer noted a favorable combination of shale assets/offshore startups, and potential for further asset sales that can help strengthen its balance sheet.

"APC shares have sharply sold-off vs. other high quality E&Ps. Investor concerns center around balance sheet deterioration in a $35-$40 per bbl WTI oil environment (we estimate net debt/EBITDA without further asset sales would rise to 4.6x at $38/bbl WTI vs. 3.5x for peers)," said Singer. "These concerns indicate unwillingness among investors to afford credit for potential asset sales which APC has historically done as part of its normal portfolio management."

The analyst added, "We upgrade APC to Buy as we see potential for leverage improvement in 2017 via: (1) higher commodity prices in 2017 (benefits all E&Ps); (2) oil production growth yoy (APC is among a select group of E&Ps that we expect will be able to grow oil production yoy in 2017); and (3) potential asset sales (we do not assume additional asset sales in 2016 in our base case, but see potential for positive surprises)."

For an analyst ratings summary and ratings history on Anadarko Petroleum click here. For more ratings news on Anadarko Petroleum click here.

Shares of Anadarko Petroleum closed at $42.50 yesterday.

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