Wells Fargo Upgrades EGN To Outperform

Wells Fargo is upgrading shares of Energen Corporation EGN to Outperform and is increasing its valuation range from $51-53 to $59-61. “Key reasons for our upgrade include: (1) recent Permian acquisition adds attractive Bone Spring, Avalon, and potentially Wolfcamp oil shale, (2) down spacing, drilling efficiencies, more productive wells are potentially positive future catalysts,” Wells Fargo writes. “(3) shares are cheap at just 5.5x FY2011E EV/EBITDA versus 7.5x midcap Permian E&P peer group average (4) conservative/nonpromotional management team with a proven acquisition track record.” Wells Fargo is maintaining its 2010E EPS of $4.39, and increasing its 2011-12E EPS from $3.54 and $3.90 to $3.60 and $3.97, respectively. Energen Corporation currently trades at $50.28.