Tuesday, Credit Suisse upgraded Newfield Exploration Co. (NFX) shares to Outperform from Neutral and increased its price target to $48 from $44. The brokerage raised its 2009 EPS estimate to $4.96 from $4.89, and its 2010 estimate to $4.11 from $3.84.
Analyst Wolff said that while the shares have performed well this year, he sees room for further valuation improvement as the market further appreciates NFX's improving asset quality. The analyst raised his price target to $48 from $44, which is based on parity to his proved plus projects net asset value, or NAV.
The analyst noted that NFX is in the midst of a multi-year shift away from Gulf of Mexico / Gulf Coast operations to a more predictable mix of unconventional gas, Woodford Shale, Granite Wash, and oil, Uinta basin, Bakken, Malaysia. In fact, the Gulf Coast now represents just 20% of 2008 reserves and 32% of estimated 2009 production.
The analyst believes the perception of NFX's asset base as sub-par will continue to fade as the company delivers improved results from its streamlined operations. Despite the strong run year-to-date, NFX trades at 5.2x on EBITDA, hedged, vs. 6.9x for the group and 6.5x, unhedged, vs. 7.6x for the group.
The analyst noted that historically, the multiple discount was explained by the short-life nature of NFX's Gulf-weighted operations, but today that is much less the case. In fact, NFX's reserve life has jumped to 11.5 years, in line with the 11.6 year group median, and well-above the 5.4 year R/P NFX had in 2004.
The analyst said that his $48 proved plus projects NAV includes about $33 for proved reserves and $15 for unproved reserve potential in the Woodford, Granite Wash, Pyrenees, Williston Basin and Monument Butte.
Currently, NFX is up $1.74 or 3.97% and trading at $45.52.
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June 05, 2026 16:18 ET A busy week for economic news flow saw a slew of reports being released that reflected the trends in the U.S. labor market. In Europe, economic growth and inflation data gained attention as the European Central Bank and Bank of England head for policy session later in the month. In Asia, the monetary policy session of the Indian central bank was in focus as the country, a major oil importer, reels under the pressures of a weaker rupee and rising inflation.