INDO - Indonesia Energy Corp (INDO) - Rating lowered in response to meteoric rise in stock price

The shares of INDO have risen from $2.90 at the beginning of the year to $62.46 (up 2054%) briefly trading above $86 at one point. Most of the rise has come in the last five trading days with the stock beginning last week at $13.30. The impetus for the rise was a jump in oil prices (up from $101 to $120 last five trading days). However, the jump in the shares of INDO far surpasses that justified by the rise in oil prices. We would remind investors that there is little to report recently from an operational point of view regarding the company.The stock price has soared past our price target of $15, which was raised just last Tuesday. We warned at the time of our price target increase that the shares of INDO are thinly traded and can be volatile. We also said that the increase in our price target was using up our gun powder and that future target increases would be difficult. Now that the stock has risen to a level more than five times our increased price target, we have no choice but to downgrade the stock. We continue to believe in the INDO story, but can not recommending buying the stock at current price levels.Fundamental analysis is no longer relevant to the buy or sell discussion. The sudden, meteoric rise in the stock price has taken on the feel of a meme stock in that stock price movement is no longer related to company fundamentals. Certainly, the stock could continue to rise as investors are attracted by the stock's movement. Maybe a takeover offer will emerge, although its hard to imagine such an offer near the current price. Either way, our fundamental analysis of company valuation does not provide investor with any information regarding future stock price movement. As such, we believe it is best to sit on the sidelines. We recommend lucky investors sell at least a portion of their holdings in INDO and do the same. Read More >>