Sterne Agee Downgrades Chesapeake Energy (CHK) to Underperform

Sterne Agee downgraded Chesapeake Energy (NYSE: CHK) from Neutral to Underperform with a price target of $9.00.

Analyst Tim Rezvan comments, "We see leverage trending toward 4.0x net debt/TTM EBITDA by y/e 2015. The near-term drilling focus in the Haynesville Shale and Mississippian Lime does not appear to be returns-focused, and CHK shares still trade at a premium multiple. Further, we see downside risk to our $2.70/mcf 2015 Henry Hub natural gas forecast (19% below consensus). We support management's moves to remove balance sheet opacity, but the prior regime's financing decisions are driving sub-optimal capital allocation amid depressed commodity prices. We acknowledge being late on this call given YTD underperformance, but we believe CHK shares remain overvalued as concerns on capital allocation and overall asset quality linger."

For an analyst ratings summary and ratings history on Chesapeake Energy click here. For more ratings news on Chesapeake Energy click here.

Shares of Chesapeake Energy closed at $14.13 yesterday.

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