TD Securities Upgrades Talisman Energy (TLM) to Buy; Analyst Says Underlying Value Tough to Ignore

March 20, 2014 7:52 AM EDT
Get Alerts TLM Hot Sheet
Price: $7.99 --0%

Rating Summary:
    3 Buy, 9 Hold, 3 Sell

Rating Trend: = Flat

Today's Overall Ratings:
    Up: 18 | Down: 8 | New: 31
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TD Securities upgraded Talisman Energy (NYSE: TLM) from Hold to Buy with a price target of $14.00 (unchanged). Analyst Menno Hulshof sees strength in the company underlying value.

"This is the first time that we have been positive on the name since January 2013," said Hulshof. "It has become increasingly difficult to ignore the fundamental gap between TLM's share price and our estimates of underlying value (NAV and sum-of-the-parts or SOTP). In both instances, our calculations suggest that there is significant upside that is not being recognized by the market."

"At a very high level, we would argue that the vast majority of market participants who believe that TLM is undervalued fall into two camps. Those in the first camp are already invested and believe that activist shareholders (principally Icahn Capital L.P.) will successfully instill change (i.e. uncover value) in the near- to mid-term. Those in the second camp may disagree on the timing of recognition of such value. We have been in the second camp for roughly 14 months. Over this period, we have argued that although management was by and large doing what it could to unlock shareholder value, company-specific circumstances (such as continued operational challenges in the U.K. North Sea) were going to prevent a re-rating within the 12-month timeframe implied by our target price," he added.

For an analyst ratings summary and ratings history on Talisman Energy click here. For more ratings news on Talisman Energy click here.

Shares of Talisman Energy closed at $9.66 yesterday.


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