Chesapeake Energy Corporation (NYSE:CHK) shares are soaring on the news that CEO Aubrey McClendon will step down effective April 1 (and they assure us that this is no April Fool’s prank).
The news was announced on Tuesday, and the stock instantly rose. It’s up another 6 percent today as well. In the investment community, it doesn’t look like anyone was sorry to see McClendon go although analysts have different views on what will happen to the company next.
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McClendon was effectively ousted by a shareholder revolt led by Southeastern Asset Management and Carl Icahn. Chesapeake Energy Corporation’s stock fell about 42 percent during 2012 as McClendon’s use of the company’s assets for personal uses became the subject of inquiries from the Securities and Exchange Commission. CMA even reports today that five-year credit-default swaps on Chesapeake Energy Corporation fell 72.5 basis points early this morning.
Analysts at several firms are also adjusting their view on shares of Chesapeake Energy Corporation (NYSE:CHK) in light of McClendon’s departure. Stifel Financial Corp. (NYSE:SF) issued a report to investors today saying that they upgraded the stock to Buy from Hold. They also set their target price for the stock at $25 per share.
Stifel Financial Corp. (NYSE:SF) analysts said the announcement of McClendon’s departure could mean that the entire company would be “put into play” or to “a more aggressive shrinking of the asset base.” They said either of the two events would lead to a faster closing of Chesapeake Energy Corporation’s net asset value discount to its peers. In addition they believe that investors who wouldn’t invest in the company because of McClendon’s involvement will now be willing to take another look at it.
Analysts at BMO Capital Markets, a subsidiary of Bank of Montreal (NYSE:BMO) (TSE:BMO), have rated shares of Chesapeake Energy Corporation (NYSE:CHK) as Market Perform and set their price target at $24 per share. They have taken a slightly more bearish approach than Stifel Financial Corp. (NYSE:SF) analysts, saying that the stock “doesn’t do it” for them.
The analysts said the stock is trading at seven times their 2013 earnings before interest, taxes, depreciation and amortization, compared to the group median of 6 times that number. They call the stock “not cheap” and say they see “greater uncertainty” and “greater downside.”