Southwestern downgraded on weaker gas price outlook at Piper Sandler

Piper Sandler downgraded Southwestern Energy (SWN) to Neutral from Overweight with a price target of $7, down from $8. The firm cites its reduced near-term natural gas price forecast and the Chesapeake (CHK) merger still pending, having recently received a second request for documents from the FTC, for the downgrade. The downgrade is not a reflection of a view that the deal doesn’t ultimately close, but is a result of higher operating and financial leverage in an anticipated weaker gas price environment, the analyst tells investors in a research note. Piper thinks investors would be better positioned in companies that are situated lower on the cost curve, offer greater liquids exposure and discount a lower implied gas price.