FBR Upgrades Gulfport Energy On Attractive Entry Point, 'Dry Gas Setup'

Shares of Gulfport Energy Corporation GPOR were surging on Friday. FBR & Co. upgraded the stock to Outperform from Market Perform, while boosting its price target from $50 to $55.

The promotion is based on three main reasons:

1) Since April 16, the stock is down more than 15 percent. This compares to the 11.8 percent decline in the SPDR S&P Oil & Gas Explore & Prod. (ETF) XOP, and has opened an attractive entry point for investors.

2) The are several “visible asset catalysts that should materialize this summer.” Gulfport is expected to share results of the Darla pad around mid-year. This “should shed light on downspacing as well as other technical factors.”

In addition, the analysts anticipate the company will reveal a type curve for its dry gas Utica acreage by late summer or early fall. “Transparency provided by these announcements should shed light on the long-term value of the dry gas Utica position as well as demonstrate lower reinvestment risk,” the experts explain.

3) There’s potential for the company to exceed 2015 and 2016 consensus production guidance and estimates.

According to the note, “The past several quarters of strong execution give us [the analysts] confidence that GPOR's Utica operations are at an inflection point, while the company's strong balance sheet can facilitate peer-leading production growth.”

“Continued execution on the company's growth strategy should also drive valuation multiple expansion, in our opinion,” the analysts conclude.