One of the few analysts who recommended selling

Enron

stock before the company collapsed is now warning that shares of

Dynegy

(DYN)

may soon be worthless. Worse yet, the company's biggest shareholder seems inclined to agree.

Prudential analyst Carol Coale on Thursday issued a sell recommendation on Dynegy shares, saying that investors should "take what little value is left off the table." Coale's recommendation came just a day after Dynegy

posted a massive $1.8 billion third-quarter loss and failed to host a conference call that would invite questions about the company's future.

In making her bearish call and setting a price target of zero, though, Coale appeared to be taking a cue from

ChevronTexaco

(CVX) - Get Report

, Dynegy's largest shareholder. The San Francisco oil giant revealed Thursday that it had written off all but $412 million of its Dynegy stake. And it warned that what's left of that $2.8 billion investment is vulnerable to further writedowns in the next quarter.

Coale predicted that Dynegy's stock, already down 99% from last year's $47.20 high, could vaporize in a matter of months. Dynegy slid 15% to 67 cents a share following Coale's downgrade.

"We believe there are a number of coinciding bearish factors that are making the company's going-concern viability tenuous," Coale wrote Thursday. "Dynegy's new CEO, Bruce Williamson, may have ... formidable challenges ahead of him over the next six months in keeping this company solvent."

Industrial Solvents

Most important, Coale said she cannot ascertain that Dynegy -- which has abandoned its once-hot trading operation -- can generate enough cash from its remaining businesses to service next year's debt. She estimates that Dynegy could end 2003 with $120 million in liquidity, but only if the company is profitable. To bolster confidence in her own 2002-03 earnings projections -- a modest 9 cents a share in total -- Coale said she needs help from a company whose financial picture may remain unclear until next year.

But "management is currently unavailable for guidance at the advice of legal counsel," Coale explained. "It is not a good sign, in our view, when a company allows lawyers to dictate their disclosures with the Street."

Without that access, analysts have been left to plow through a slew of third-quarter charges to determine actual operating results on their own. And they've emerged with results that, while different, clearly missed Wall Street expectations. Coale concluded that, excluding one-time items, Dynegy lost 20 cents a share -- far worse than the 8-cent loss she projected and other Wall Street analysts' break-even consensus.

Christopher Ellinghaus of Williams Capital determined that Dynegy had lost 14 cents a share in the third quarter, using a more generous formula than Coale's. But he also expects Dynegy to lose, rather than earn, 5 cents a share next year.

Like Coale, Ellinghaus confessed to relying heavily on guesswork. Without some direction from management, he said, "Dynegy is little more than a mystery."

Bailing In

In Coale's opinion, Dynegy has virtually no hope for a corporate rescue by ChevronTexaco at this point. Dynegy investors have for months clung to ChevronTexaco's presence as a form of insurance for their own company.

Coale has had a lukewarm hold rating on Dynegy's shares since the day they began sliding from their 52-week high last November. With her downgrade Thursday, she became the first analyst to issue a sell recommendation for the stock. Other analysts continue to rate the stock some version of hold.

Coale gained some notoriety last year, when she dropped her recommendation for Enron from buy to sell. She was one of only two Wall Street analysts to issue a sell recommendation before Enron went bankrupt. Even so, Coale admitted to her clients that the recommendation -- which came after Enron's once-lofty stock had already sunk into the single digits -- was "too little, too late."