Cabot Oil & Gas' (COG) robust first-quarter 2008 results were driven by volume gains as well as higher commodity prices. Production during the period was up 6% from the year-earlier level, with the full-year growth expected to be in the 10% to 13% range. The company's improved results and outlook highlight the gains that Cabot has made in the recent past.
The stock has responded positively to management's asset repositioning program over the last couple of years that has transformed it into a relatively lower risk onshore player with longer-lived reserves. We, however, believe that the stock's premium valuation relative to peer group already reflects all these positives and therefore see limited upside from current levels. Our Hold recommendation remains unchanged.
Cabot has been one of the best performing stocks in our E&P universe over the past year. With the positives adequately reflected in current valuation, in our view, we see no near-term catalyst that can aid valuation from current levels. As such, we are maintaining our Hold recommendation.
Read the full analyst report on COG.
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