Karoon Energy gains after Jarden analysts upgrade to 'buy'
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The news: Shares in Karoon Energy lifted at market open after Jarden analysts upgraded their rating on the oil and gas major.
The numbers: Karoon shares were 2.3% higher at $1.81 at 10:45am AEST.
Jarden analysts upgraded their rating on the stock from 'overweight' to 'buy', and increased their target price from $2.21 to $2.28.
They noted that Karoon's share price has underperformed in recent weeks, falling 26% since mid-April, while global oil benchmark Brent crude has declined just 4% in that time.
The context: The analysts said a production downgrade at Karoon's Who Dat site in the Gulf of Mexico, combined with market fears the company would pursue M&A in the near-term, are the main reasons for its share price fall.
They expect a positive response to Karoon's unveiling of its capital management strategy on 25 July, estimating that the company will generate a free cashflow yield of 22% over the forecast period and can both pursue M&A and return cash to shareholders.
Last month, Karoon faced public criticism from shareholders Samuel Terry Asset Management and Sandon Capital, which failed in their attempt to deny five of the nine tabled resolutions at the energy company's annual general meeting.
The source: Jarden research
