UPDATE: KLR Upgrades Cabot Oil and Gas on Recent Pullback

In a report released Friday, analyst John Gerdes of KLR upgrades Cabot Oil and Gas (NYSE: COG) from Accumulate to Buy, lowering price target to $48.

Gerdes notes that the largest catalyst of growth for COG is the Appalachian Basin Marcellus Shale. projecting abut 41 percent production growth in 2014. COG plans to start a six-rig program to begin drilling this year.

The report breaks down their price analysis, "Our target price is based on the net present value of free cash flow over the life of a company using a reasonable discount rate. COG's valuation applies a 12.5% discount rate to determine the net present value of its free cash flow. Our reasoning for using a 12.5% equity return includes the long-term nominal performance of the broader equity market (10%-12%), the greater volatility of cyclical energy investments and the company's market capitalization above $7.5 billion (i.e. large-cap)."

COG opende Friday at $35.33 after closing previous session at $34.97.