Jefferies Reaffirms ‘Buy’ Rating On Chesapeake Energy

The research analysts at Jefferies Group, Inc. (NYSE:JEF) maintained their buy rating for the stock of Chesapeake Energy Corporation (NYSE:CHK), the second largest oil and natural gas producer in the United States.

The analysts’ research  on Wednesday showed that their price target for the stock is $26 per share.

Jefferies Reaffirms 'Buy' Rating On Chesapeake Energy

The stock value of Chesapeake Energy Corporation (NYSE:CHK) is up by more than 1 percent to $19.77 per share during  midday trading on Wednesday. Over the past 52-week range, the shares of the oil and natural gas producers traded to its lowest level at $13.32 a share and it highest stock price was $26.09 per share. The company has $12.63 billion market capitalization.

The Street reiterated its hold rating for Chesapeake Energy Corporation (NYSE:CHK) with a score of C- due to the company’s deteriorating net income, disappointing return on equity, and weak operating cash flow.

“The company, on the basis of change in net income from the same quarter one year ago, has significantly underperformed when compared to that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income has significantly decreased by 36.6% when compared to the same quarter one year ago, falling from $473.00 million to $300.00 million,” according to The Street.

In its report, The Street noted that the revenue growth of the company beat the industry average’ revenue growth of 3.5 percent.  Chesapeake Energy Corporation (NYSE:CHK) revenue growth was 29.7 percent.  The company’s profit margin was 38.60 percent, which is considered strong while its debt-to-equity ratio at 0.78 is high compared with the industry average.

Last month, Chesapeake Energy Corporation (NYSE:CHK) reported an adjusted net income of $153 million or $0.26 per share and $3.54 billion revenue for the fourth quarter of 2012. The company exceeded the consensus estimate of analysts at $0.15 per share.

During the same period last year, the company reported $0.58 earnings per share. The company ended the quarter with an operating cash flow of $1.1 billion. Its total production during the period was 362 Bcfe and its average daily production was 3.9 Bcfe.

Meanwhile, analysts at Barclay’s Capital reduced their price target for the stock of Chesapeake Energy Corporation (NYSE:CHK) to $22 per share from their previous price target at $26 per share. The research firm also recommended an equal weight rating for the stock. Analysts at Johnson Rice also downgraded their rating for the stock to equal weight.