Mizuho upgraded Chesapeake Energy (CHK) to Buy from Neutral with a price target of $104, up from $96. The merger between Chesapeake and Southwestern Energy (SWN) not only creates a U.S. shale gas “powerhouse” with operational and marketing flexibility, the demonstrable cost synergies of at least $400M annually by the end of 2025 are accretive to both net asset value and valuation multiples, the analyst tells investors in a research note. While near-term natural gas price weakness, below-peer free cash flow in 2024 and higher pro forma leverage are risks, Mizuho sees 30% upside to Chesapeake’s net asset value, the analyst says.
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