Research firm Macquarie Equities Research upgraded BlackPearl Resources (PXX:TSX) from a NEUTRAL rating to an OUTPERFORM rating and reduced its target price to C$7.50 a share. The stock closed at $4.40 on August 9, yet Macquarie reduced BlackPearl's target share price due to recent weather conditions that interfered with production.

The company reported Q2 production of 6.545 million barrels of oil equivalent per day on August 10, which was far below Macquarie's expectation of 7.117 mboe/d. BlackPearl's reported cash flow per share of $.0.06 was also below the research firm's expectations of $0.08. Macquarie consequently lowered its expectations for BlackPearl's 2011 expected cash flow per share to $0.28 from $0.33.

Macquarie concluded that BlackPearl's stock is currently undervalued as it has come under pressure from recent events which will be short-lived. It added the company's lack of debt and cash reserves to reasons to invest in the oil producer. The company also has a history of strong growth results and a proven management team.

Keith Schaefer owns BlackPearl.