Thursday, KeyBanc Capital upgraded St. Mary Land & Exploration Co. (SM) shares to Buy from Hold with a price target of $42.
Analyst Jack Aydin noted that following his time spent with management of St. Mary Land & Exploration during his hosted client lunch with management, he upgraded the stock to Buy and established a price target of $42.00 per share, based on his increased RNAV from $40.00-$45.00 per share.
The analyst said that SM has been working over the past several years to build sizable positions in emerging shale plays, as well as high-grade its technical staff, in order to transition the company to more of a resource play focused company with a deep inventory of repeatable, high rate of return drilling prospects.
Now with what the analyst considers to be meaningful "company maker" types of positions in several key plays, 225 thousand net acres in the Eagle Ford and ~50 thousand net acres in the Haynesville to name two, and with encouraging initial results in these plays, he does believe SM is "making the turn," as its motto goes.
The analyst also noted that on a valuation basis, SM is one of the most attractive names on list, trading just at 4.9x 2010 and 4.2x 2011 on an EV/DCF basis, vs. peers at 7.1x and 5.6x, respectively.
Currently, SM is down $1.24 or 3.79% and trading at $31.47.
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