Gaming Chesapeake Energy Corporation (NYSE:CHK) Upgraded at Nomura, Here's Why

Chesapeake Energy Corporation (NYSE:CHK) Upgraded at Nomura, Here's Why

Published By Blake Audett at October 21, 2016 01:57 pm

Although the oil market’s volatility has convinced brokerages to hold bearish views about oil exploration and production companies, research firm Nomura has recently upgraded Chesapeake Energy Corporation (NYSE:CHK) to Neutral. Analyst Lloyd Byrne raised his price target for the company’s stock to $7.5 from his previous target of $4, in his recent thesis. He further discussed that some improvements may be seen in FY17, as he raised his EPS estimates for the company. That being said, the scenario has been a lot more volatile for oil stocks.

Due to this, it is very difficult to see prices stabilizing in near term. Even OPEC has been trying hard to cut on its supply, however the increase in U.S crude stocks plummeted oil prices once again. Similar has been the case with the $5.33 billion company, as its stock prices have been a lot more volatile since the start of this year.

However, some improvements such as changes in capital structure and debt negotiations are a few positive points to notice about the company. The Oklahoma based company has lately been gaining traction from investment firms, who are convinced for a bullish stance on the company. We believe that volatility in prices shall continue towards the mid of 2017, after which the situation shall improve. Therefore, it is still a good proposition for day traders, as price movements are pretty much dependent on developments in the oil market.

The street has recently been a lot more optimistic, as brokerages such as Bank of America Corp. persist on double-digit price targets. Meanwhile, a few of them such as Jefferies group maintain a bearish stance. The consensus price target (PT) stands at $7.68, which implies an over 11% upside from yesterday’s close.