SunTrust Ups Rice Energy Target To $32, Sees 'Continued Growth'

In a report published Monday, SunTrust Robinson Humphrey analyst Neal Dingmann maintained a Buy rating on

, while raising the price target from $30 to $32. Growth at

continues to be strong. Moreover, "likely incremental water dropdowns" following the recent peer approval continue to boost Rice Energy's midstream value, which is estimated at around $13 per share. "Dropdowns to Rice Midstream Partners likely begin in early next year adding liquidity and accelerating the value of Rice's RMP GP stake. It appears Street consensus is conservative for Rice's 2016 EUR and production rate as well as liquidity profile given $400mm+ in likely dropdowns and continued upstream growth in operating cash flows that combined could put total cash flow 20%+ higher than the average Street estimate," analyst Neal Dingmann wrote. With downspaced Utica wells remaining strong and Marcellus flow rates continuing to move north, Rice Energy continues to generate upstream growth. "Core Utica/Marcellus remains one of our top three plays with Rice one of our favorite Appalachian names," the report said. Dingmann believes that the company is poised to beat its guidance for 2015 and grow at least by about 5 percent above the consensus expectation for 2016.