Frontline Ltd. (FRO: sentiment, chart, options) is down more than 5% at midday following a downgrade from Jefferies & Co. Analyst Douglas Mavrinac slashed FRO from "hold" to "underperform," citing its high spot market exposure to potentially weaker crude tanker spot charter rates in 2009.

Although the shares of FRO have recently bounced higher after finding a foothold near the 25 region, pessimism is thick on Wall Street. During the past 10 days, the equity has racked up an International Securities Exchange (ISE) put/call ratio of 1.63. This reading ranks higher than 90% of other such ratios taken in the past year.

Likewise, analysts are crowded onto the bearish bandwagon. Only 1 of FRO's 4 brokerage ratings is a "buy," according to Zacks, while Thomson Financial notes an average 12-month price target of $23.53. This consensus estimate is 21% below the stock's closing price last Friday.

Today's downgrade in the face of FRO's recently positive price action signals that pessimism on the shares may be overdone. As these skeptics are forced to reevaluate their opinion on this rebounding stock, more gains could be in store.