Fibbank raised the rating of Antero Resources (AR.US) and Range Resources (RRC.US)

Canada's Bank of Nova Scotia upgrades Antero Resources (AR.US) and Range Resources (RRC.US) to outperform the sector, with price targets of $44 and $45 respectively.

Cameron Bean of Bank of Nova Scotia says now is the time to increase exposure to natural gas, and Antero Resources is the best play because its recent shift to investment grade on its heavy gas sales mix has reduced financing costs and maintained liquidity advantages in the premium NGL sales market.

Brian adds that Antero is more vulnerable to the downside in natural gas and oil prices than its peers, so investors must “be prepared to act quickly if the commodity outlook turns negative.” (But) “for a company with high-quality upstream assets and downstream sales upside, Antero’s current price is also a good entry point.”

Moreover, the analyst sees Range Resources as one of the higher quality, lower risk stocks in the sector, and believes the recent weakness in the stock has created a good entry point.

Range’s P/E ratio has fallen to the middle of the pack, its free cash flow yield is above the average, and its balance sheet and capital intensity are the best in the US natural gas industry, so the analyst sees the current as a good time to re-buy the stock.

Moreover, several other research firms have recently initiated coverage on Antero. Jefferies Financial Group upgraded its target price on Antero Resources to $41.00 from $40.00 and gave the stock a “buy” rating in a July 11 report. Wolfe Research initiated coverage on Antero Resources with a “peer perform” rating in a July 18 report.