Cabot Oil & Gas raised to Buy at KLR after recent pullback

Cabot Oil & Gas (COG +0.8%) is upgraded to Buy from Accumulate at KLR Group, which notes that COG's largest catalyst for growth is the Appalachian Basin Marcellus Shale, projecting ~41% production growth in 2014 as it plans to start a six-rig program to begin drilling this year.

The firm's new $48 target price is based on the NPV of free cash flow over the life of a company using a reasonable discount rate; COG's valuation applies a 12.5% discount rate to determine the NPV of its free cash flow.

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