Chesapeake Energy (CHK) shares fell 4.2% late Tuesday morning following a downgrade from investment firm Sterne Agee, which sees the energy company missing out on resurgent natural gas prices.
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Sterne Agee downgraded Chesapeake to underperform and set a price target of $20 a share, noting that Chesapeake’s 2013 guidance could be at risk as “questionable hedge decisions” will not allow the company to fully benefit from strengthening natural gas prices.
Shares were down 94 cents to $21.23 on the news.
Analyst Tim Rezvan said in a research note to clients that Chesapeake’s current 2013 gas hedges “dampen exposure to resurgent natural gas prices.” He added that shares are “more than fully valued” at the current price.
The note also said Chesapeake’s $1.02 billion in proceeds from the sale of its Mississippi Lime assets were disappointing and reflected a “board mandate to raise cash with a sense of urgency amid waning enthusiasm for the oil potential in the play.”