Range Resources price target raised

[dan_s]

Stifel has raised RRC to a BUY with a price target of $52. This compares to my current valuation of $47.80.

We are raising our rating on RRC to Buy from Hold based on an improving natural
gas market outlook coupled with recent well analysis that causes us to raise our
risked NAV/share estimate to $74 from $42.

Tightening Natural Gas Market
We are raising our 2H16 NYMEX natural gas price forecast to $2.90 from $2.62
and have an upward bias to our 2017 forecast of $3.10. Adjusted for heating
degree days, the market appeared to be 3-5 Bcf/d tighter y/y during last winter's
extreme El Nino. Recent below normal injections confirm the same trend. U.S. dry
gas supply is down approximately 3% y/y and 4% from its February 2016 peak
while demand continues to grow.

Strong Marcellus Well Performance in 3 Areas
State production data supports higher estimated ultimate recoveries (EURs) for 3
of the company’s 4 Marcellus areas. Our type wells in the SWPA wet and NEPA
dry areas generate returns that rank among the best in the industry although our
estimates are 22% below RRC's projections for both areas. Likewise, well
economics are exceptional in the SWPA dry area where our EUR is in-line with the
company's forecast. Partially offsetting these positives, the SWPA super-rich area
does not appear to be meeting expectations based on the data we analyzed.

Ample Liquidity and Interest Coverage
Liquidity of ~$1.5B consists primarily of an undrawn credit facility. We project
debt/TTM EBITDA to increase to 3.5x at YE16 from 3.3x at 3/31/16. While high,
2016 interest coverage is comfortable at 6.2x.

Modest Premium Should Expand
The stock is currently valued at a 7% premium to our mid-cap peer group based on
equally weighted price/NAV and EV/2017E EBITDA multiples. We look for the
premium to expand on the back of natural gas market tailwinds and best-in-class
assets. Our $52 target assumes the stock achieves a value of 70% of our NAV
estimate.

This is also good news for Antero Resources (AR) and Gulfport Energy (GPOR).

[dan_s]

NEW YORK (TheStreet) -- Range Resources' (RRC) stock price target was upped to $50 from $45 at Jefferies.

The firm has a "buy" rating on shares of the Fort Worth-based oil and natural gas company.

"We have updated our RRC model to incorporate the pending acquisition of Memorial Resources (MRD) set to close later this quarter. Our PT rises...reflecting our favorable view of the MRD asset," Jefferies wrote in an analyst note.

The deal enhances the company's direct leverage to natural gas prices, allows for more flexible capital spending and improves its leverage metrics,

Additionally, the stock was upgraded to "buy" from "hold" at Stifel this morning. The firm said the outlook for natural gas prices is improving while Range Resources' well output is rising, the Fly reports.