NEW YORK (AP) -- Newfield Exploration's stock rose Tuesday as an analyst raised the oil and natural gas company's rating, citing an international asset sale and potential growth in core areas.
THE SPARK: Amir Arif of Stifel Nicolaus lifted Newfield Exploration Co. to "Buy" from "Hold" and established a $29 price target.
THE ANALYSIS: Arif said in a client note that Newfield will likely close on the sale of its international assets — located offshore Malaysia and China — during the second half of the year. This could possibly lower the Woodland, Texas company's net debt to $2.4 billion from $3.5 billion by year's end and reduce the downside risk facing the shares.
Arif also believes that the international asset sale will help spur growth in Newfield's four core areas — Uinta, Bakken, Cana and Eagle Ford — as the asset sale "creates a smaller base with less drag on corporate production."
Better-than-expected first-quarter production makes Newfield's full-year forecast seem conservative, Arif said, predicting that the company will likely raise its guidance sometime this year.
A representative for Newfield did not immediately respond to an email seeking comment.
SHARE ACTION: Up 93 cents, or 4 percent, to $23.94 in morning trading. The stock has traded in a 52-week range of $19.57 to $35.65. For the year to date, the shares are down 14.1 percent.