Ahead of the Bell: Analyst downgrades McMoRan Exploration

Jefferies & Co. analyst David C. Adams cut his rating to "Hold" from "Buy." The stock has risen 120 percent so far this year, from $13.09 to Friday's $28.82 close.

"While we believe McMoRan is clearly headed in the right direction, and there's a lot to be excited about in the exploration program, we believe the good news is already priced into the stock," Adams said in a note to clients.

He raised his price target to $27 from $18 to account for McMoRan's boost to its long-term price outlook for oil and natural gas.

McMoRan bought Newfield Exploration Co.'s interest in the outer continental shelf of the Gulf of Mexico last August for about $1.1 billion.

The company has been working in an area known as the Blackbeard Prospect. If successful, the operation will likely yield $1.3 billion of potential value for McMoRan shareholders, Adams said.

Yet due in part to the project's risk the drilling area is more than 30,000 feet below the ocean's surface Adams said a "Buy" rating for McMoRan is not appropriate.