Photo: The Lost Ogle
BMO Capital Markets’ Dan McSpirit announced today he was upgrading Chesapeake Energy stocks to “outperform,” and he set a new price target of $25 as shares hit what he describes as “peak negativity.”Shares reached an all-time low of $16.87 Friday on continued revelations about CEO Aubrey McClendon’s controversial personal well stake program.
The McClendon controversy is “the driver” behind CHK’s underperformance. If one looks past the current mess, one will find a company with “a deep and wide asset base” that is fundamentally valuable, he says.
“This trade qualifies as high octane, but again that’s the point. We believe CHK shares could better reflect the underlying asset value once the smoke clears, one way or another. This upgrade is not about handicapping the likelihood of a change in management, but about a change in market sentiment.”