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The Word on the Street: What Analysts Are Saying about Chesapeake Energy

Could Chesapeake Energy Reveal a 1Q16 Surprise on May 5?

(Continued from Prior Part)

Analyst recommendations for Chesapeake Energy

In the weeks leading up to Chesapeake Energy’s (CHK) 1Q16 earnings release, Wall Street analysts have provided target prices for the next 12 months.

Consensus rating for Chesapeake

Approximately 9.4% of analysts covering Chesapeake have rated the stock a “buy,” while ~59.4% rate it a “hold,” and 31% rate it a “sell.” The average broker target price of $4.17 for CHK implies a -37% return in the next 12 months.

CHK’s peers WPX Energy (WPX), Gulfport Energy (GPOR), and QEP Resources (QEP) have average broker target prices of $8.61, $33.23, and $17.43, respectively. These would imply returns of ~3.2%, 12.2%, and ~7.6%, respectively, in the next 12 months.

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The high, low, and median analyst target prices for CHK are $7, $0.50, and $4.5, respectively. Notably, Chesapeake is a component of the Energy Select Sector SPDR ETF (XLE) and makes up ~0.3% of the fund.

Analyst target prices for Chesapeake

In terms of individual recommendations, KLR Group gave Chesapeake the most optimistic target price of $7. This would imply a return of approximately 6% in the next 12 months.

Tudor, Pickering, Holt & Company and Evercore ISI also gave Chesapeake price targets of $6 each, implying returns of -9% in the next 12 months. Scotia Howard Weil and J.P. Morgan (JPM) gave lower target prices of $5 each, implying returns of 24.2% in the next 12 months.

RBC Capital Markets and Capital One Securities gave CHK even lower target prices of $4 and $3.5, respectively. These would imply returns of -39% and -47%, respectively, over the next year. One of the lowest target prices came from Barclays (BCS), which gave CHK a target price of $1, implying a return of -85% in the next 12 months.

For a detailed overview on Chesapeake, check out the Market Realist series Chesapeake Will Focus on Liquidity and Reduced Spending in 2016.

Browse this series on Market Realist: