Wells Fargo Downgrades Frontline Ltd. (FRO) to Underperform; Short Squeeze Has Taken Valuation Too High

March 20, 2012 8:06 AM EDT Send to a Friend
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Price: $1.65 +2.48%

Rating Summary:
    2 Buy, 7 Hold, 3 Sell

Rating Trend: Up Up

Today's Overall Ratings:
    Up: 37 | Down: 17 | New: 30
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Wells Fargo downgraded Frontline Ltd. (NYSE: FRO) from Market Perform to Underperform with a price target range of $3-4.00

Wells analyst said, "We are downgrading shares of FRO as we believe the recent short squeeze (FRO is up 69% over the past 10 trading days, vs. S&P 500, up 5%), has taken valuation well beyond a sustainable level – particularly given the fact that we continue to estimate that the stock has a negative NAV (-$4.29/share). While we remain conscious of the fact that the recent short-squeeze could continue, potentially pushing shares even higher, at this point, we believe the downside risk in the stock [a conservative $5/share (or 64%) based on our price target] far exceeds any potential upside from here, particularly given the fact that there has been little-to-no change in FRO’s long-term fundamentals."

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 $8.28 yesterday.


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