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Cairn Energy downgraded sharply as City is made to wait for India decision

Without the possibility of a big payout in the immediate future, RBC reckons Cairn lacks compelling catalysts
oil and gas operations
RBC's price target was cut to 225p

Cairn Energy PLC (LON:CNE) has been downgraded by RBC Capital after a delay in the arbitration in which it is challenging the Indian government's use of retrospective legislation for taxes, as analysts readjust their valuation for what is rather than what might be.

RBC cuts its rating to ‘sector perform’ from ‘outperform, and, the price target was also downgraded.

“The chance of a quick, 160p, the payout has been deferred; fast money has moved on and we have cut our price Target from an event-driven 380p to a Tangible NAV-driven 225p,” RBC analyst Al Stanton said in a note.

READ: Cairn Energy sets sights on exploration upside

“At last week's peak, Cairn was up 43% year-to-date as the market speculated on a near-term (positive) result to Cairn’s long-running, $1.4bn Indian arbitration case.

“However, the ruling has been delayed and we see few, compelling, near-term catalysts; therefore expect the stock to track the oil price.”

Cairn shares presently change hands at around 175.5p.

 

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