logo
  Join        Login             Stock Quote

Comstock Resources (CRK) Upgraded To 'Buy' By Brean Capital, PT $24

 January 11, 2013 10:32 AM
 


(By Balachander) Comstock Resources Inc. (NYSE: CRK) shares were upgraded to "buy" from "hold" with a price target of $24 by Brean Capital LLC, which said the recent pullback and OXY's acquisition now make the stock an attractive buy.

Based on our research, the brokerage said OXY acquired J.C. Thompson's Permian assets, which includes 20,000 net acres and 4,000 Boe/d of production, for roughly $520 million.

CRK's Permian acreage is adjacent to OXY's new acreage and essentially has the same geology, Brean Capital said.

"We are upgrading the shares given that the implied price per acre of the OXY/Thompson deal is $15k/acre-$18k/acre versus CRK's implied market value of $4k/acre," the brokerage wrote in a note.

[Related -Dividend Roundup: COHU, CRK, DDR, M, NOC, PPL, YUM]

Brean Capital said its initial Hold rating was based on high expectations already factored into the stock for CRK's Permian acreage, but the recent pullback and OXY's acquisition now make the stock an attractive buy.

The pushback on CRK is that the growth rates may not be as high as consensus, but capex will likely also be less than expectations which we think offsets weaker volume growth, the brokerage said.

Comstock Resources announced that it plans to spend $420 million in 2013 for development and exploration activities, which Brean Capital said is below its initial estimate of about $470 million.

Brean Capital cut its 2013 estimates based on the lower-than-expected capex budget. The brokerage lowered its oil production estimate to 9.5 MBbls/d (from 10.7 MBbls/d) and maintained gas production estimate of 168 MMcf/d.

[Related -Stocks Decline On Consumer Confidence Data; Groupon (GRPN) Jumps]

"The lower oil estimate reduced our total production estimate to 225 MMcfe/d (from 232.3 MMcfe/d). Consequently, our 2013 EPS estimate is lowered to -$0.08 (from $0.19)," the brokerage said.

The stock, which has been trading in the 52-week range of $11.05 to $21.16, rose 1.72 percent to trade at $14.79 on Friday.

iOnTheMarket Premium
Advertisement

Advertisement


Post Comment -- Login is required to post message
Name:  
Alert for new comments:
Your email:
Your Website:
Title:
Comments:
 

rss feed

Latest Stories

article imageChina's Cunning Plan To Revive Growth

By now, we all know the story of China's troubles. China achieved its stunning growth through a combination read on...

article imageA Mild Improvement For The US Macro Trend In May… So Far

How’s that second-quarter rebound working out for the US? It’s still a shaky affair, but there are signs read on...

article imageThe Future Of Banking Is Now On Sale

The initial public offering class of 2014 was surely an elite group. 275 companies raised a combined $85 read on...

article imageTextbook Arc Rounded Reversal for High Flying Airlines

A beautiful chart pattern played out on two airline stocks – Southwest and United read on...

Advertisement
Popular Articles

Advertisement
Daily Sector Scan
Partner Center



Fundamental data is provided by Zacks Investment Research, and Commentary, news and Press Releases provided by YellowBrix and Quotemedia.
All information provided "as is" for informational purposes only, not intended for trading purposes or advice. iStockAnalyst.com is not an investment adviser and does not provide, endorse or review any information or data contained herein.
The blog articles are opinions by respective blogger. By using this site you are agreeing to terms and conditions posted on respective bloggers' website.
The postings/comments on the site may or may not be from reliable sources. Neither iStockAnalyst nor any of its independent providers is liable for any informational errors, incompleteness, or delays, or for any actions taken in reliance on information contained herein. You are solely responsible for the investment decisions made by you and the consequences resulting therefrom. By accessing the iStockAnalyst.com site, you agree not to redistribute the information found therein.
The sector scan is based on 15-30 minutes delayed data. The Pattern scan is based on EOD data.