FBR Capital Recommends An IPO or Spin Off at Chesapeake Energy (CHK)
CHK Hot Sheet
Rating Summary:11 Buy, 15 Hold, 2 Sell
Rating Trend: = Flat
Today's Overall Ratings:
Up: 16 | Down: 7 | New: 23
Analysts at FBR Capital are recommending that Chesapeake Energy (NYSE: CHK) take bold steps to address the value disconnect in the shares, which they say is not operations-related. The firm is recommending an IPO/spin-off of a major asset such as Fayetteville and/or the sale of a substantial portion of its conventional assets in one fell swoop.
The firm notes that Chesapeake is trading at a significant discount to the 3P NAV value of $41/share. They suggest this discount is due to a stretched balance sheet and lack of sufficient non-dilutive capital to facilitate the continued transition of the asset base from conventional to unconventional.
FBR also said if the company hedges all its production through 2012 at current futures prices, then the funding gap could decline to only $2.7 billion before asset sales.
The firm believe that in the next 12 months, the company will be able to execute upon some form of the above mentioned ideas. They are reiterating their Outperform rating and $35 price target, which is 85% of 3P NAV of $41 per share.
The firm notes that Chesapeake is trading at a significant discount to the 3P NAV value of $41/share. They suggest this discount is due to a stretched balance sheet and lack of sufficient non-dilutive capital to facilitate the continued transition of the asset base from conventional to unconventional.
FBR also said if the company hedges all its production through 2012 at current futures prices, then the funding gap could decline to only $2.7 billion before asset sales.
The firm believe that in the next 12 months, the company will be able to execute upon some form of the above mentioned ideas. They are reiterating their Outperform rating and $35 price target, which is 85% of 3P NAV of $41 per share.
You May Also Be Interested In
- Barclays Lowers PT and Estimates on Royal Bank of Canada (RY); Coming Off The Bandwagon
- Goldman Sachs Boosts Numbers on PVH Corp (PVH) After Q1 Beat
- Conditions of Growth, Economic Analysis - Research Report on Netflix, Inc. and Chesapeake Energy Corporation
Create E-mail Alert Related Categories
Analyst CommentsRelated Entities
UBSSign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!
