Oppenheimer Maintains Outperform on Chesapeake Energy Corporation Following $500M Capital Budget Cutting
Oppenheimer analyst Fadel Gheit came out with his views on Chesapeake Energy Corporation (NYSE:CHK), following the news that the company reduced its 2015 capital budget to $3.5-$4B, $500M under previous guidance. The analyst rates the stock an Outperform with a $22 price target, which implies an upside of 54% from current levels.
Gheit noted, "Based on new guidance and current strip prices, we trim '15E EPS to -$0.77 from -$0.71 and expect operating cash flow of $1.99B in 2015 and $1.57B in 2016. Assuming CAPEX of $3.75B, and common and preferred dividends of ~$500M, we expect CHK free cash flow deficits of $2.25B and $2.68B, respectively, with the gap closed with ~$6B in combined cash and borrowing capacity. CHK shares are trading at the lowest P/ CF multiple among peers, based on 2015 consensus estimates."
According to TipRanks.com, which measures analysts' and bloggers' success rate based on how their calls perform, analyst Fadel Gheit has a total average return of -17.8% and a 6.5% success rate. Gheit has a -40.8% average return when recommending CHK, and is ranked #3546 out of 3546 analysts.