- Chesapeake Energy (NYSE:CHK) is OK for investors to include as “part of a higher-beta portfolio" amid an improving long-term outlook for the company, Susquehanna analysts say as they raise their stock price target to $7 from $6.50.
- Although CHK will have a significant cash flow outspend next year, Susquehanna says the long-term outlook provided last week suggests the company is on a path towards cash flow neutrality by mid-2018; the firm's latest model suggests CHK can grow ~10% in 2018 with all-in capex of $2.6B and only a ~$200M outspend.
- The firm expects Increased production combined with lower operating and transportation costs to yield a more than doubling of EBITDA in 2018 vs. the H2 2016 run rate, prompting a drop in net leverage (including working capital deficit) to ~4x from nearly 9x expected exiting this year.