Stifel Raises Price Target On Noble Energy By 22% To $45

Stifel raised its price target on Noble Energy, Inc. NBL by 22 percent to $45, implying an upside of 19 percent, and said the stock's 16 percent discount would narrow as political issues ease in the second half of 2016.

"NBL is one of the few companies in our peer group generating double-digit production growth this year," analyst Michael Scialla wrote in a note.

Scialla, who has a Buy rating on the stock, sees 2016 volumes to increase 15 percent y/y, while discretionary cash flow exceeds capex by more than $300 million. The latter excludes the first half 2016 divestiture proceeds of $743 million or potential future sales.

Noting that the company's DJ basin is generating strong returns, Scialla said liquidity and cash should stay above $5 billion and $1 billion, respectively, throughout 2016 as a credit facility with a $4 billion borrowing base remains undrawn.

Related Link: Simmons Assumes Overweight Rating, $48 PT On Nobel Energy

"We project debt/TTM EBITDA to increase to 3.1x at YE16 from 2.8x at YE15," the analyst highlighted.

In addition, the company's first two Delaware Basin wells are significantly outperforming the analyst's 600 MBoe type curve after 30 days of production.

The analyst expects Colorado political landscape improves this year. Moreover, Leviathan appears to be taking steps toward sanction, as Israel's government recently added a new clause to its "Natural Gas Framework" to address concerns of the High Court of Justice.

At the time of writing, shares of Noble Energy were down 0.19 percent at $37.65.