UPDATE: Topeka Capital Markets Initiates Magnum Hunter Resources at Buy on Entry Point

In a report published Friday, Topeka Capital Markets analyst Gabriele Sorbara initiated coverage on Magnum Hunter Resources (NYSE: MHR) with a Buy rating and $6.50 price target.

In the report, Topeka Capital Markets noted, “We are initiating coverage of Magnum Hunter Resources with a Buy rating a $6.50 price target. We believe the recent underperformance is due to its accounting issues (now resolved) and leverage, presents an entry point, as MHR's monetization plans should improve its capital structure considerably and allow for the unlocking of its NAV. MHR is an asset and catalyst-rich company, with more core acreage than it can realistically develop, but it has several imminent sources of potential capital to begin the process of accelerating NAV. Our RNAV is conservatively at $9.25/share, but we believe its liquids-rich Marcellus alone could be worth well north of $10.00/share (net of debt and preferred stock), with the right development program in place (or in the right hands). Further, success in the wet gas and dry gas areas of the Utica shale could add another $10.00/share in a full development program.”

Magnum Hunter Resources closed on Thursday at $3.96.