Chesapeake Energy Corporation Passes Average PT: Now What?

Chesapeake Energy shares roared past Zacks’ average price target after the company announced that it was exiting the Barnett Shale. The stock remains well below its 52-week high of $9.55 per share, but it is finally garnering some interest among investors again. In fact, Schaeffer’s report that its put/ call open interest ratio for Chesapeake Energy reached 0.81, which is only one percentage point from its lowest level in 12 months. The firm added that this call skew is quite unusual for this particular stock.

Chesapeake Energy passes average target

Forbes contributor Dividend Channel notes that Zacks Investment Research’s average price target stands at $4.83, which means that the stock has now surpassed that level. It means that either Chesapeake Energy is about to see a slew of price target increases or a rash of downgrades. In this particular case, many analysts have chosen the former course of action.

Warren Buffett’s 2018 Activist Investment

Berkshire Hathaway Warren BuffettMost investors are aware of Warren Buffett's most high profile long-term investments. However, there is one long term investment that is often overlooked. Q2 2020 hedge fund letters, conferences and more This is building materials maker USG, which was owned by Berkshire Hathaway for more than 17 years before it was acquired in 2018. If Read More

Twelve analysts contributed to the average price target reported by Zacks, with the lowest target set at $1 per share and the highest (at the time the article was written) sitting at $8 per share. It’s unclear which firms contributed their targets toward Zacks’ average target, but there is something interesting about the trend.

Over the last couple of months, there hasn’t been much movement in terms of ratings on Chesapeake Energy. What has changed is that two more analysts have picked up coverage of the stock (or at least they simply started contributing to Zacks). Seven analysts rated Chesapeake as a Strong Sell, while two rated it at Sell, eight had a Hold rating, and three had a Strong Buy rating. The only thing that’s different from a month ago is that the stock has picked up two extra Strong Buy ratings. All of the other numbers have remained the same. Two months ago, the stock had eight Strong Sell ratings and nine Hold ratings.

Compare these ratings to the ratings at FactSet, which include four Buy ratings, one Overweight rating 18 Holds, two Underweights, and nine Sells, although the price target at FactSet is similar to that at Zacks, standing at $4.90.

Chesapeake Energy price targets raised

We are starting to see some analyst movement in Chesapeake Energy shares, although again, it’s unclear which of these firms contribute to Zacks’ target and how their changes might impact that target. UBS, Goldman Sachs and KLR raised their price targets for Chesapeake, with KLR analyst John Gerdes slapping a bold target of $9 per share (raised from $8) on Chesapeake when reiterating its Buy rating.

On the flip side, Jefferies analyst Jonathan Wolff continues to rate the stock at Underperform with a $4 price target even after the announcement that the energy giant is exiting the Barnett Shale. This suggests potential downside of more than 20% for Chesapeake Energy shares.

Chesapeake Energy shares bounced around just above $5 per share on Friday. The stock is at $5.01 as of this writing.