Raymond James: If you like Linn Energy, you should love LinnCo

|By:, SA News Editor

Raymond James analysts clearly prefer LinnCo (LNCO +2.9%) over Linn Energy (LINE +0.5%), noting LNCO is trading at a ~$1.60 discount to LINE while also yielding ~50 bps more than LINE.

The firm says it is not clear what's keeping LNCO's valuation suppressed, other than it is taking an extended period of time to place the incremental ~95M shares issued in the Berry acquisition into a more stable investor base.

LNCO reported solid Q2 results, with production and cash flow coming in above guidance; the firm believes it should ultimately trade at a ~7% premium over LINE, given its improving distribution coverage and potential to unlock further value from its Permian Basin acreage.