TLM

We are downgrading Talisman Energy (TLM) shares to Underperform from Outperform following the cut in its annual production target for the second time in about two months. TLM expects repair work in the North Sea and weather-related issues in Canada to hurt operations and lower average output for 2011.

The dampened guidance, though not likely to alter volumes in a big way, raises questions about the company's sustainable operational efficiency and execution abilities. Low gas prices and falling oil prices are also causes for concern.

Given these headwinds, we expect shares of Talisman Energy to be under pressure in the near future. Our $12 price objective reflects a 2011 P/E multiple of 14.6x.
 
TALISMAN ENERGY (TLM): Free Stock Analysis Report
 
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