UPDATE: Imperial Capital Upgrades Gastar Exploration to Outperform, Raises PT

In a report published Wednesday, Imperial Capital upgraded its rating on Gastar Exploration

from In-Line to Outperform, and slightly raised its price target from $2.50 to $3.00. Imperial Capital noted, “We are upgrading Gastar Exploration (GST) to Outperform from In-Line, as shares have been under selling pressure and are now trading at a level that possess limited downside, in our opinion. We also are raising our one-year price target to $3.00 from $2.50 previously. The shares present an opportunity for nearly 100% potential upside to our revised price target, which is based on our future proved NAV at long-term pricing of $4.00/Mmbtu and $95.00/bbl. Based on our calculation, over the next sixteen months, we project the company's proved NAV to grow from $1.27 per share at the end of 2Q12 to $3.09 per share at year-end 2013, driven solely by its activity in the liquids-rich Marcellus shale in Marshall and Wetzel County. With this level of expected proved NAV creation, the significant discount to our conservative RNAV of $4.75 per share and with its option value exposure in the emerging Eaglebine play and undisclosed new venture oil play, we believe GST could surface as a takeout or reorganization target. While this is not the market for speculating in micro-caps, we feel that the nearly 100% upside to the current share price cannot be ignored, although, in this volatile market, investors may need to be patient.” Gastar Exploration closed on Tuesday at $1.56.