McMoRan (MMR) Slumps for Second Day; JPMorgan Thinks Shares are Still Overvalued

McMoRan (NYSE: MMR) is on the outs again Tuesday following a 22 percent drop on Monday as it issued an update on Davy Jones No. 1 flow rate.

JPMorgan's Joseph Allman is out today with a few comments. The analyst thinks McMoRan shares are overvalued and the company has "zero equity value" when using Nymex futures. Using the JPMorgan price deck, Allman thinks McMoRan should trade around $2.31 per share.

Overall, the market may have been giving McMoRan "significant credit" for success at Davy Jones and other Ultra-deep shelf plays. McMoRan may abandon the well if unable to clog of barite.

Basically, flow testing on Davy Jones started November 11 and the company is injecting a barite solvent to clean perforations for a measurable test rate.

JPMorgan rates McMoRan at Underweight.

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