In a Friday edition of "things that make you go hmm," an analyst team at Citi Research led by Faisal Khan downgraded Linn Energy (LINE) and LinnCo (LNCO) to Sell from Hold. Citi also lowered the price target on both to $0.00 from $3.25.
The ratings change comes more than a week after the Houston-based company announced that it was exploring "strategic alternatives to strengthen its balance sheet." Linn Energy also announced that it borrowed the remaining amount under its $3.6 billion credit facility to be used for "general corporate purposes."
In a note released on Thursday, Khan wrote that chapter 11 filing was "imminent" for Linn Energy. (Linn Energy and LinnCo have been clients of Citigroup Global Markets.)
"We believe the company will likely file for Chapter 11 after the next round of borrowing base redetermination and/or post a covenant breach," Khan wrote.
Linn Energy's shares have fallen 97% over the last year and are down 67% and trading below $0.40 since the company released its statement last week.
Again, if the company's rapidly falling stock wasn't reason enough to stay away, perhaps it is time to heed analysts' late warnings and shy away from a falling knife.