Lehman Brothers downgraded Pioneer Natural Resources (PXD) to equal-weight from overweight.
Analyst Thomas Driscoll says Pioneer shares have outperformed this year as the oil exploration and production company's strong production profile has become more evident. He notes shares now trade at a modest premium to the peer group (on cash flow). He says, while he thinks that premium is justified by strong production growth rates, he believes there are other exploration and production names in his universe that offer better value today.
As a result, he downgraded Pioneer, but raised his $28 target to $31, which assumes 10% production growth in 2004 and a 6.75% debt-adjusted cash multiple vs. the previous figure of 6.5%.