Anadarko Petroleum upgraded to "market perform"

10/07/03 - Wachovia Securities

NEW YORK, October 7 (New Ratings) – Analysts at Wachovia Securities upgrade Anadarko Petroleum Corporation (APC: NYSE) from "underperform" to "market perform."

Shares of Anadarko Petroleum, one of the largest US-based independent natural oil and gas exploration and production companies, are currently trading at $42.99.

According to Wachovia Securities’ research note dated October 6 and published this morning, the current upgrade in rating is due to the company’s stock trading at a 7% discount to the NAV estimates. The company’s stock has historically traded at a premium. The analysts say that the negative investor sentiment, following the company’s reduced production guidance in June, is better reflected in the stock price at present. The analysts do, however, express their optimism regarding the near-term outlook for Anadarko.

Wachovia Securities believes that Anadarko’s Marco Polo project in the Gulf of Mexico would drive organic growth next year. The company’s cost reduction measures, announced in July, are also expected to help decrease the impact of the recent cost increase witnessed throughout the industry, the analysts add. Anadarko’s low-cost projects in Algeria, Alaska and the Rocky Mountains are also likely to help control costs while driving production growth.

The analysts say that speculations regarding a potential takeover of Anadarko have declined over the past two weeks. The company is also currently addressing issues related to over-investment in "unfocused" exploration activities and its large organizational structure, Wachovia Securities states.

The 2003 and 2004 EPS estimates are $5.02 and $3.63, respectively. The 2003 and 2004 P/E estimates are 8.6x and 11.8x, respectively.

Wachovia Securities upgrades Anadarko Petroleum Corporation from "underperform" to "market perform."