Shares in Edinburgh-based Cairn finished the day at 151.3p, down 7.3p or 4.6%.
Cairn, which made billions of pounds for investors from a bumper find in Rajasthan, has struggled to replicate this exploration success elsewhere.
It has also become the subject of a tax investigation by the Indian authorities.
Analyst Caren Crowley wrote in a note for clients: "We previously argued that Cairn Energy's share price was underpinned by its financial assets.
"However, the uncertainty created by the Indian tax assesment weakens this valuation thesis."
Nevertheless, its revised valuation at 356p per share, down from 425p, is still substatnially ahead of the prevailing price for Cairn shares.
Davy's valuation includes 111p for Cairn Energy's 10% share in Cairn India, which it had been intending to sell to mining group Vedanta Resources.
The Irish stockbroker also includes a 56p per share Indian tax liability.
The Davy analysts suggested that Ciarn might sell its North Sea developmetn assets, Catcher and Kraken, if it needed cash.
India's tax authority contacted Cairn in January to discuss income tax assessments dating back seven years. It has requested further details on Cairn Energy's 2006 income tax in January, pre-dating the flotation of Cairn India in 2007.
Last week Cairn Energy halted a $300 million (£182m) share buy-back scheme due to the probe.