Photographer: Luke MacGregor/Bloomberg

Barclays Upgrades and Downgrades Same Company -- On Same Day

  • Share count miscalculation prompts reversal on SemGroup Corp.
  • Stock was up 3.4 percent on upgrade; gain halved on re-rating

If only analysts at Barclays had measured twice, perhaps they wouldn’t have had to cut once.

Analyst Christine Cho cut her rating on SemGroup Corp. to equal weight -- normally an unremarkable change for a $1.9 billion company whose stock plunged more than 15 percent over two days last week.

But Cho’s downgrade Tuesday came just hours after she had told clients the prior week’s rout left the energy-transportation company at an attractive valuation, warranting an overweight rating.

Turns out, the abrupt about-face came after the analysts discovered the firm’s new price target failed to tally an estimated 11 million shares when looking at the total stock issued. That led to an artificially inflated valuation.

“We are updating our model and rating due to a share count miscalculation,” she wrote, downgrading the shares back to equal weight and returning her price target to $32 from $36.

Both notes moved the shares. The upgrade SemGroup higher by as much as 3.4 percent to $29.10 at the open. The stock erased all of that advance within minutes of the second note’s dissemination around 11:15 a.m. in New York.

Cho did not immediately respond to an email and phone call seeking comment.

The analyst can take solace in the fact that she’s far from the first to make such an error: a Piper Jaffray analyst downgraded and upgraded shares of hair salon chain Regis Corp. in the same morning amid confusion over how a regulatory change would affect its costs.

Others have stuck to their guns, even after uncovering a math error. Morgan Stanley initiated shares of Snap Inc. with an overweight rating -- and didn’t change its target price of $28 even after finding that it had mistakenly overstated its earnings forecasts.

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