Yahoo Finance Analysts’ Median Target Price versus MRD’s Merger Implied Value
Analyzing the Range Resources-Memorial Resource Development Merger
Wall Street analysts’ ratings for Memorial Resource Development
Currently, ~61% of Wall Street analysts rate Memorial Resource Development (MRD) a “buy” and ~39% of the analysts rate it a “hold.” There aren’t any “sell” recommendations on the stock. The median price target from these recommendations is $18.03. This is ~14% higher than the merger implied value to Memorial Resource Development shareholders of $15.75 per share.
Based on the median price targets from Wall Street analysts’ recommendations, S&P 500 (SPY) upstream companies like CONSOL Energy (CNX), Devon Energy (DVN), and Occidental Petroleum (OXY) have potential upsides of ~17%, ~11%, and ~1%, respectively, from their closing prices on May 16, 2016. The SPDR S&P Oil and Gas Exploration & Production ETF (XOP) generally invests at least 80% of its total assets in oil and gas exploration companies. The ISE-Revere Nat Gas Index Fund (FCG) invests in natural gas producers. The Vanguard Energy ETF (VDE) invests in the broader energy market.
Individual recommendations
Above table shows Wall Street analysts’ forecasts for Memorial Resource Development after its merger announcement.
As shown in the above table, the most recent recommendation of “outperform” comes from RBC Capital Markets. It was issued on May 16, 2016. RBC Capital Markets assigned Memorial Resource Development a target price of $16. This is ~15% higher than the closing price of $13.86 on May 16.
Highest target price
The highest target price for Memorial Resource Development comes from Scotia Howard Weil and Mitsubishi UFJ Securities USA. Both of the firms assigned Memorial Resource Development a target price of $23. This is ~66% higher than the closing price of $13.86 on May 16. Scotia Howard Weil and Mitsubishi UFJ Securities USA issued their recommendations on May 16, 2016. They expect the target price to be reached within 12 months from the date of recommendation.
It must be noted that all of the target prices issued by Wall Street analysts, after Memorial Resource Development announced its merger with Range Resources, are higher than the merger implied value of $15.75 per share to Memorial Resource Development shareholders.
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