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Why Teekay Corporation Took Off -- and Rose 10% Today

By Rich Smith – Jun 22, 2017 at 5:36PM

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Seems somebody likes Teekay stock a lot.

What happened

Teekay Corporation (TK -2.10%) stock closed today up 9.5%.

So what

The stock's sudden rise appears to owe to a delayed reaction to positive analyst sentiment. Yesterday, a researcher from "Value Investor's Edge" on SeekingAlphaPro penned an ultra-positive note on Teekay Corporation stock, calling it his "highest conviction long idea ever."

According to this write-up, Teekay Corporation controls three "daughter" companies -- Teekay LNG Partners, Teekay Tankers, and Teekay Offshore -- but only needs one for its stock to take off. The researcher argues that Teekay LNG Partners "is undervalued by 60% vs. peers with inferior assets and prospects," and that, if it simply reaches fair value relative to its peers, the stock of the parent company Teekay Corporation could possibly triple in value to anywhere from $13 to $16 per share.

At the same time, the researcher argues that a "recovery" in Teekay's other two subsidiaries could turn the parent company's stock into a "5 or 6-bagger."

Tanker and oil platform.

Image source: Getty Images.

Now what

That prospect of an up-to-500% profit appears to have enticed enough investors to push Teekay stock up 10% today -- but beware. "Value Investor's Edge" isn't the only one with an opinion about Teekay stock. Just a couple of weeks ago, investment banker Morgan Stanley laid out the bear case against Teekay, warning that, far from tripling, quadrupling, or quintupling in price, Teekay stock could just as easily fall 50%.

With the stock down 10% since the banker issued that warning -- even after today's rebound -- I'd say that, so far, Morgan Stanley is getting the better of this argument.

Rich Smith has no position in any stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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