Goldman Says Continental Resources Is a Buy

While Fools should generally take the opinion of Wall Street with a grain of salt, it's not a bad idea to take a closer look at particularly stock-shaking analyst upgrades and downgrades -- just in case their reasoning behind the call makes sense.

What: Shares of Continental Resources (NYSE: CLR  ) climbed 4% yesterday after Goldman Sachs initiated coverage on the oil and natural gas explorer with a Buy rating.

So what: Along with the rating, Goldman planted a price target of $130 per share on Continental, representing about 26% worth of upside to its closing price on Monday. Goldman said that the company is ideally positioned to benefit from several factors, including the Bakken shale's upside potential, efficiency gains stemming from its strong competitive position, and even its exposure to the South Central Oklahoma Oil Province, reinforcing recent investor optimism over Continental's prospects going forward.

Now what: Even if those catalysts aren't as potent as Goldman believes, Continental's fundamentals alone make it worth a closer look. "[Continental] has superior cash-on-cash returns, and we see flexibility for management to lower its funding gap, de-lever or maintain superior growth," wrote Goldman in a report to investors. Of course, with the stock now up 30% over the past three months alone and trading at a 25-plus P/E,  Fools will need plenty of energy-savvy to estimate just how much of that bullishness is already baked into the price.

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