27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.
Southwestern Energy Co. (NYSE:SWN) was hit with a sell-side downgrade Thursday after the sale of its Fayetteville Shale operation.
The Analyst
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BMO Capital Markets analyst Dan McSpirit downgraded Southwestern Energy from Outperform to Market Perform with a $7 price target.
The Thesis
After the $2-billion transaction, McSpirit said he anticipates an average reinvestment rate of 120 percent in 2019 and 2020.
“We believe this cash flow-outspending outcome is consistent with the $600 million in proceeds from the sale that's been set aside to supplement cash flow to develop the remaining Appalachian Basin asset,” the analyst said.
About $900 million of the proceeds will be used to pay debt, he said. BMO's valuation applies the sale revenue to the balance sheet in the fourth quarter on the expectation of a December closing date.
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Key catalysts include the use of proceeds from recent Fayetteville asset deprivation as a way to grow reserves and production, as well as to repurchase shares.
“We estimate fair value of SWN shares using several methodologies, including historical multiples of EBITDA, relative trading multiples of peers and absolute value utilizing an after-tax net asset value approach,” McSpirit said.
Price Action
Southwestern Energy shares were trading down 6.63 percent to $4.93 at the time of publication Thursday.
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Photo courtesy of Southwestern Energy.
27% profit every 20 days?
This is what Nic Chahine averages with his option buys. Not selling covered calls or spreads… BUYING options. Most traders don’t even have a winning percentage of 27% buying options. He has an 83% win rate. Here’s how he does it.