Southwestern Energy Co.’s stock tumbled 19% in active afternoon trade Friday, as oil and gas company’s 2016 operational outlook prompted analyst Jonathan Wolff at Jefferies to swing to bearish from bullish. Wolff slashed to stock’s rating to underperform, after being at buy for the last year. He cut his stock price target to $4, which is 27% below current levels, from $11, which was 62% above Thursday’s closing price of $6.77. The company provided late Thursday a 2016 production outlook that Wolff said was well below expectations, and said it currently had no rigs running. Wolff said financial leverage could become a concern, given Southwestern’s current cash flow position relative to its high debt burden. “Clearly, we were too optimistic about [Southwestern’s] ability to navigate weak macro conditions,” Wolff wrote in a note to clients. Wolff had kept his buy rating since Feb. 2, 2015 despite the stock tumbling 74% through Thursday’s close, and despite the company announcing in January it would lay off about 45% of its workforce. “Recent staff reductions may have come too late,” Wolff wrote, “given the now urgent need to address lofty debt levels rather than on focusing on maintaining the asset base.”
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