UPDATE: Stifel Nicolaus Upgrades Gulfport Energy on Positive Outlook
In a report published Wednesday, Stifel Nicolaus analyst Amir Arif upgraded Gulfport Energy (NASDAQ: GPOR) from Hold to Buy, and named a $73.00 price target.
In the report, Stifel Nicolaus noted, “We are upgrading GPOR from Hold to Buy with a $73 target price, which implies potential for 40% upside, which we think could be achieved over the coming 6-9 months. We would use the 9% drop in the stock last week when GPOR lowered its 2013 production guidance by 30% as a good entry point to build or add to positions. We believe that the upcoming acceleration in quarterly production volumes, and the possible release of 2014 guidance with 3Q results, will be the two key drivers that could cause the next leg up in the stock in the coming 6-9 months. If our 2014 production growth outlook is in the right range, then this name is trading at 5.7x 2014 EBITDA relative to our coverage average of 5.4x, which suggests minimal downside risk. Given the high organic driven 2014 production growth rate expected (194%), we believe that GPOR should trade comparable to other high growth resource-rich producers, which are trading at 8-10x EBITDA. Our $73 target price reflects 8x 2014 EBITDA. Therefore, with the recent dip providing an entry point, production growth about to pickup meaningfully in 2H13, 2014 guidance possibly coming next quarter, and an attractive risk reward ratio of 8% downside (no EBITDA premium multiple) and 40% upside (8x EBITDA multiple), we are upgrading the shares to a Buy.”
Gulfport Energy closed on Tuesday at $52.56.
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