Zacks Investment Research downgraded shares of Chesapeake Energy Corporation (CHK) from NEUTRAL to UNDERPERFORM on January 16, 2015, with a target price of $17.00.
We are downgrading our recommendation on Chesapeake Energy shares to Underperform from Neutral. The company reported weak third quarter earnings, due mainly to lower price realizations. Its focus on the liquid-rich plays like Utica Shale is expected to contribute highly to the company's growth momentum. Going forward, Chesapeake expects receding operating costs, lower expected commodity prices, and increased production. Although we appreciate management's execution and ongoing cost reduction initiatives, we believe billions in asset sales are required to fund this program. Chesapeake also exhibits a weak financial profile with a huge debt balance. Chesapeake is trying hard to minimize capital expenditure through its divestiture program.
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