Aleading Wall Street analyst upgraded shares of Frontline Thursday on the heelsof a second quarter earnings miss and sharp decline in share price.

Michael Webber of Wells Fargo Securitieshiked the New York-listed tanker owner’s grade to “market perform” from “underperform”a day after it posted a loss, which prompted a sell-off that saw the stockplummet 14%.

With a negative net asset value estimateof $3.29 per share, the researcher says the John Fredriksen-backed company is “significantlyovervalued” at current levels of around $3.15 but believes the risk/rewardprofile is “relatively balanced”

“Weexpect Frontline to continue to employ its vessels in the spot market and whilewe believe this exposure to the weak rate environment will remain a headwindfor shares, we believe substantial negative sentiment is already priced in asit is simply difficult for rates and sentiment to get much lower,” he toldclients in a morning alert.

Webbersaid he doesn’t expect to see “continued linear downside” going forward and urgedinvestors who are shorting the stock to proceed with caution as he believes thedays of making quick cash by picking low hanging fruit in the tanker space aredrawing to a close.

“There issignificant option value within Frontline and while we think that option is stillovervalued given how aggressive recent downside has been, the fact thattanker rates have been hitting systemic floors for eight consecutive weeks amidwhat may be bottoming sentiment, and the possibility of more positive Q4seasonality, wesimply no longer advise being short Frontline and its inherent optionality,” heexplained.

Of the 26 equity analysts following Frontline,Webber and his rating are among the minority but still in good company. At lastcheck, sixteen had stamped the stock with a “sell” and only one, Omar Nokta of DahlmanRose, have branded shares with a “buy”.