While oil prices remain weak, even in spite of the he death of Saudi Arabia’s King Abdullah bin Abdulaziz, there might be a shining gem amid the situation. According to Credit Suisse analysts Edward Westlake and Zachary Deschaine, Chesapeake Energy Corporation CHK is set to outperform the broader market. Amid several other downgrades, the firm upgraded the stock from Neutral to Outperform and raised its price target from $21 to $24 on Friday, January 23.
On the flip side, Credit Suisse downgraded six other oil stocks:
Outperform To Neutral
- Chevron Corporation CVX
- Hess Corp HES
- Magnum Hunter Resources Corp MHR
- Noble Energy, Inc. NBL
- Murphy Oil Corporation MUR
- Exxon Mobil Corporation XOM
What Separates Chesapeake From Peers?
Although there are some headwinds to this call, including the oversupply in natural gas and liquids markets, analysts still view “the current valuation as defensive with the shares trading toward the lower end of the 2015 and 2016 EV/EBITDA valuation.”
According to Credit Suisse’s high yield research team, this transaction has the potential to “meaningfully enhance the company’s credit,” and leaves Chesapeake’s balance sheet standing as one of the strongest in the peer group.
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