UPDATE: Stifel Nicolaus Upgrades Comstock Resources to Buy on Gas-to-Oil Transition

Stifel Nicolaus upgrades Comstock Resources

from Hold to Buy and establishes a price target of $19. Stifel Nicolaus comments, "In our view, CRK has been making a successful asset/capex transition from gas to oil and we expect the impact of it to start showing up in the stock in 2H12. We see several drivers for the stock – 1) gap between CF and capex closing by 4Q12, 2) Eagle Ford JV possibility by early fall, 3) further validation/testing of its Wolfbone acreage, including the upcoming drilling of its first two horizontals. In addition, recent asset sales ($123 mm in May) and terming out of debt ($300 mm in June) have improved the balance sheet profile. With the balance sheet improved, as the oil mix takes hold (12% in 1Q with expectations of it moving to 19% by 4Q), and the funding gap closes, the discount being applied to this name should erase." CRK closed at $14.45 on Friday.