Wells Fargo Upgrades Frontline Ltd. (FRO) to Market Perform; Taking 'Short' Profits

August 30, 2012 7:08 AM EDT
Get Alerts FRO Hot Sheet
Price: $7.08 +0.14%

Rating Summary:
    3 Buy, 10 Hold, 2 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 13 | Down: 22 | New: 54
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Wells Fargo upgraded Frontline Ltd. (NYSE: FRO) from Underperform to Market Perform with a price target range $3-$4.

Analyst, Michael Webber, said, "We believe FRO remains significantly overvalued from an NAV perspective (with our NAV estimate at - $3.29/share), however we are not expecting continued, linear downside from here given (among several factors) seasonality, geopolitical risk, and broader shifts in macro sentiment. We believe there is significant option value within FRO, and while we think that option is still overvalued (negative NAV), given how aggressive recent downside has been (FRO is down 61% since March 19, vs. S&P 500, flat), the fact that tanker rates have been hitting systemic floors for 8 consecutive weeks (rates below zero) amid what may be bottoming sentiment, and the possibility of more positive Q4 seasonality, we simply no longer advise being short FRO and its inherent optionality."

FY12 EPS estimate lowered from (0.63) to (1.03) and FY13 from (0.32) to (0.86)

For an analyst ratings summary and ratings history on Frontline Ltd. click here. For more ratings news on Frontline Ltd. click here.

Shares of Frontline Ltd. closed at $3.19 yesterday.

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