- Marathon Oil (MRO -0.9%) is lower after being downgraded to Market Perform from Outperform with an $11-$12 valuation at Wells Fargo following yesterday's surge after agreeing to sell $950M in non-core assets.
- While Wells views the asset sale as a positive and says MRO is implementing its stated goals of achieving cash flow neutrality and protecting its balance sheet, it believes shares are fully valued, especially given the 25% dilution from its public offering earlier in Q1.
- However, the firm says MRO’s ability to achieve cash flow neutrality in 2016 and potentially resume growth in 2017-18 in spite of lower oil prices creates an attractive long-term opportunity for investors.
- Now read Marathon Oil: Smaller footprint, lower costs, stronger balance sheet