Magnum Hunter (MHR) Shares Given New $4.00 Price Target by Wunderlich Analysts
Equities research analysts at Wunderlich lowered their price target on shares of Magnum Hunter (NYSE: MHR) from $10.00 to $4.00 in a research issued note to investors on Tuesday. They currently have a “buy” rating on the company’s shares.Posted by LUSA Staff on Oct 4th, 2011 // No Comments
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Well shorts don't usually provide their analysis until they want to cover. :)
But if I had to guess, the shorts will find some fly-by-night oil company in roughly the same space that has stretched its production projections some. So the company will have projected say 10k Boepd, and actually produced 8k. Then the shorts will be able to say: "See - the long-term shale production projections [in region X] are all too high - these wells deliver at high rates for a bit and then drop off sharply."
Of course the problem for an outsider is we don't really know if they are correct or not.
I find it bizarre that they would lower their PT to $4 from $10 given the recent news from the company. The macro environment is obviously bad, but if they are largely hedged for 2012, what is the problem? Maybe I'm being optimistic here, but surely the economic picture will get better in a year.
the only real explanation I can come up with is "fear." Fundamentals seem to justify much higher prices, but the macro situation is so dicey and complicated that no one really knows what Mr. Market is going to do next, or if those fundamentals will be allowed to bear fruit. Debt bubbles are confusing and terrible things, and when they explode they can cause all sorts of unknowable collateral damage.