Shares of SM Energy Surge on Analyst Upgrade

Shares of independent oil and gas producer SM Energy (NYSE: SM) were up as much as 10.8% in early morning trading and are up 8.4% as of 11:30 a.m. EST today. The surge in price comes after analysts at JPMorgan upgraded the stock from underweight to neutral.

This is a bit of an oversimplification, but analyst ratings on oil and gas producers change for two reasons:

Based on the analyst note that accompanied the upgrade, it appears that this change was for the latter reason. The analyst note said that this upgrade was due to a change in his models for oil prices and a more favorable outlook for companies with acreage in what's being called the Austin Chalk formation in South Texas. 

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Source Fool.com