Enron tanks following downgrades (ENE, DYN) By Michael Baron
Enron (ENE) is plunging $1.99, or 28.4 percent, to $5.00, after Goldman Sachs lowered its rating on the company's shares to "market performer" due to doubts that Enron will be able to recover lost business. The firm, which also downgraded Enron's merger partner Dynegy (DYN) , also cited "new and major liquidity issues" raised in the Form 10-Q Enron filed Monday with the Securities and Exchange Commission. "The cash infusion from DYN appears inadequate to restore the confidence of ENE customers and we now question the accretion to DYN in a combination and valuation of energy convergence shares during the current uncertain period," analyst David Fleischer told clients in a research note. Goldman said it will be difficult for Enron shares to generate strong returns until there has been a full disclosure of its liabilities, and it can operate on a normal basis. On Dynegy, the firm said it prefers to stay on the sidelines as investors "question the multiple they want to pay for the uncertainty that Enron may bring." Dynegy shares are down $2.60, or 6.2 percent, to $39.10. Enron was also downgraded to "hold" from "buy" by CIBC World Markets. |