UPDATE: Stifel Upgrades Chesapeake Energy Corporation to Buy, Names $34 PT as Production Growth Outlook Improves

In a report published Thursday, Stifel analyst Amir Arif upgraded the rating on

from Hold to Buy, and named a $34.00 price target. In the report, Stifel noted, “We are upgrading CHK to a Buy with a $34 target price. Following May's Investor Day, we wrote that CHK was becoming well positioned from a capex efficiency perspective heading into 2015. 2Q14 earnings, released before the open on Wednesday, further confirmed that thesis, based on 2Q production volumes, the slight increase in 2014 guidance, and, most importantly, CHK's YE14 exit rate projections. After factoring in the various announced and planned asset sales/swaps and preferred retirements, we estimate that 2015's production growth will be at the high end of the current guidance of 7%-10% Y/Y growth (6% just based on the 2014 exit rate expectation staying flat; 9% based on our current estimate), resulting in a 5.6x 2015E EV/EBITDA multiple, versus our coverage average of 6.4x. This attractive valuation, combined with the further cleaned up and simplified balance sheet (from the recent Utica preferred repurchase and services business spinoff) and the recent correction in gas prices and equities, provide a good entry point heading into what we believe is a positive production growth and capex efficiency trajectory in 2H14 and above consensus expectations for 2015 production growth.” Chesapeake Energy Corporation closed on Wednesday at $26.19.