BMO Capital Markets initiated Cardero Resource with a Outperform rating
Not the target everyone wants, but obvious not that it's way oversold.
BMO Capital Markets initiated Cardero Resource (NYSE: CDY [FREE Stock Trend Analysis]) with a Outperform rating and a $0.45 price target.
BMO Capital Markets commented, "Cardero is rated Outperform (S) based on valuation, near-term production and lower capital requirements. Cardero trades the lowest of the coal group on P/NPV (both BMO's base case and spot) and EV/t of reserves, and among the lowest on implied pricing. BMO would expect development companies to trade below established producers; however, it is notable that Cardero trades in line with SouthGobi, a company with significant geopolitical risk and a selling shareholder factored into its stock price."
Very surprising that an analyst would go out on a limb and recommend a stock that has performed so poorly, much less one that is trading at such a low price. Like the rest of us shareholders they must have pretty strong conviction that the company's assets far exceeds its current market value.
Further research on this Banks rating says : "The bank has an estimated net present value on the company, at a 10% discount rate, of $686 million - 47.5% higher than the net present value stated in Cardero's pre-feasibility study. "
Current PPS of Cardero has the company valued at a mere $37M, with true net present analysis of the company's worth being $686M, that's 18x the current price. We all know CDY shouldn't be trading this low, but how it's sitting here at this discount for this long is a surprise.
CDY outperforms at creating frequent 52-week lows. CDY outperforms at taking on debt to pay the daily bills. CDY management does not perform well at all. BMO Capital Markets reported an outperform rating, but the rating is applicable to areas that are averse to any upward momentum.