UPDATE: Stifel Upgrades Comstock Resources to Buy, Names $25 PT as Oily Acquisitions Provide Inventory & Upside

In a report published Friday, Stifel analyst Amir Arif upgraded the rating on Comstock Resources CRK from Hold to Buy, and named a $25.00 price target. In the report, Stifel noted, “Over the last week, CRK announced the acquisition of two oily assets prospective to the emerging TMS and East Texas Eagle Ford (ETX EF) plays. While each play is still in its early stages, we believe these acquisitions add new avenues for oily growth, and remove our previous concern on South Texas Eagle Ford inventory, and that despite yesterday's move, CRK remains very attractively priced versus its peers at 3.9x 2014 EV/EBITDA. We would be buyers of CRK ahead of its 2014 guidance release, which should be in mid-December. We are upgrading CRK to a Buy with a $25 TP, reflecting 4.7x 2014 EV/EBITDA. We believe that the existing South Texas EF provides 1-2 years of remaining quality inventory, while this production will be supplemented by the ETX EF in the medium term, with the TMS acreage adding longer-term (18+ month) upside, as CRK holds the most meaningful exposure to the play on a market cap basis after GDP. Expectations for a positive 2014 guidance release, an increasing oil weighting due to ETX EF drilling, multiple compression, and industry TMS drilling results, given CRK's leverage to the play, should help move CRK higher in the coming six months.” Comstock Resources closed on Thursday at $17.70.