Why Magnum Hunter Resources Corp's Stock Dropped 11% Today

By Matt DiLalloFool.com

What: Shares of Magnum Hunter Resources Corp were off more than 11% by midafternoon on Thursday. The move was largely driven by an analyst downgrade the day before, with that negativity compounded by weaker oil prices.

So what: On Wednesday, Imperial Capital downgraded Magnum Hunter Resources Corp's stock from in-line to underperform. On top of that, the firm slashed Magnum Hunter Resources' price target from $1.75 to $1.25 per share. In that report, the downgrading firm said:

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Said another way, Magnum Hunter Resources isn't self-funding its business right now, which is a concern as there are no signs it will turn the corner anytime soon.

Now what: While investors didn't react much to the downgrade yesterday, several apparently didn't sleep well last night and are dumping their stock today. That's not a surprise, as Magnum Hunter Resources has a tough road ahead. This is a company that has used outside capital to fund its growth for years and now that those sources are drying up, the company is left with fewer options -- and those at its disposal aren't as compelling as the cheap capital it has grown accustomed to using.

The article Why Magnum Hunter Resources Corp's Stock Dropped 11% Today originally appeared on Fool.com.

Matt DiLallo has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

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