How Do You Play Chesapeake Energy Corporation (NYSE: CHK) Follow These Analyst Comments?


Chesapeake Energy Corporation (NYSE: CHK) has been the subject of a number of Wall Street analysts in the past few days. Analysts who have recently weighed on the stock are united in the view that the stock has a bright future.

The latest to weigh on Chesapeake Energy Corporation (NYSE: CHK) are SunTrust analysts, who have upped their price target on the stock to $11 from $8. Keep in mind that Chesapeake stock is currently changing hands in the vicinity of $8 and has gained nearly 80% so far in 2016. Despite the gains, SunTrust seem to be of the view that there is still more upside potential in the stock.

Earlier, Wunderlich analysts had also weighed on the stock of Chesapeake, upgrading both their rating and price target. The analysts upgraded rating on Chesapeake stock to BUY from NEUTRAL and increased their price target to $10 from $6.

What underpins the upgrades?

If you are the investor who doesn’t pass an opportunity to do due diligence on a stock, the question that you must be asking yourself is what supports the series of upgrades on Chesapeake stock. In any case, analysts keep revising their ratings and price target on the stocks they cover, which is why it is important to find out the underlying cause of recent Chesapeake stock upgrades.

Chesapeake Energy Corporation (NYSE: CHK)’s improving financial position seems to be one key reason a growing number of analysts are becoming bullish on the stock. With less than $660 million in debt due in 2016 and 2017, analysts say that liquidity issues at Chesapeake have been fixed.

The analysts at SunTrust expect Chesapeake to continue strengthening its balance sheet by monetizing non-core assets. They expect the company to dispose of a large chunk of its assets before the end of 2016, thus pushing the year’s revenue to more than $2 billion.

Improving internal efficiency is another reason analysts are bullish on the prospects of Chesapeake Energy Corporation (NYSE: CHK). At SunTrust they say that the company is not getting adequate credit for its strong operational efficiencies, which is in part reflected by low-cost wells across several regions.


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