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.
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