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Tuesday, Chord Energy Corp (NASDAQ:CHRD) received an upgrade in stock rating from BofA Securities, shifting from Neutral to Buy, despite a reduction in the price target to $114 from $125. According to InvestingPro analysis, Chord Energy appears undervalued at its current price of $94.91, with a strong financial health score of "GREAT" and an attractive P/E ratio of 5.8x. The company maintains a significant 8.8% dividend yield while operating with moderate debt levels. BofA Securities highlighted Chord Energy’s recent operational achievements, including the completion of its first 4-mile lateral well under budget and the ahead-of-schedule drilling of a second well. These operational efficiencies have contributed to the company’s robust gross profit margin of 49.08% and strong cash flows. InvestingPro data reveals that management has been actively buying back shares, demonstrating confidence in the company’s future prospects. Subscribers can access 8 additional ProTips and comprehensive analysis through the Pro Research Report.
According to BofA Securities, Chord Energy’s decision to increase the number of 4-mile lateral wells spudded this year from three to seven signals a significantly lower risk to the development of these extended laterals. As a result, BofA Securities has adjusted its valuation to account for a new base case scenario. This scenario anticipates that by 2027, 80% of Chord’s program will consist of extended lateral wells, with 50% being 4-mile and 30% being 3-mile laterals. This adjustment reduces the estimated sustaining capital expenditure by $100 million to $1.3 billion, providing an $8 tailwind to the firm’s valuation.
The analyst’s commentary emphasized Chord Energy’s strong balance sheet, which is expected to provide stability amidst a volatile oil market. This is supported by the company’s healthy debt-to-equity ratio of 0.10 and strong cash flows that easily cover interest payments. BofA Securities also pointed out that recent operational successes have not yet been fully reflected in Chord Energy’s stock price. These factors, combined with a catalyst-rich path ahead and nine analysts revising earnings estimates upward, are believed to position Chord Energy favorably against its industry peers.
BofA Securities’ revised price objective of $114 reflects a marked-to-market price deck, taking into account the lower end of their new base case range for Chord’s extended lateral development program. Despite the lower price target, the upgrade to a Buy rating indicates a positive outlook for Chord Energy’s stock performance moving forward.
In other recent news, Chord Energy Corp has been active in several key areas that are of interest to investors. The company recently issued $750 million in senior unsecured notes with a 6.750% interest rate, maturing in 2033. The proceeds were used to repurchase $366.342 million of its 6.375% senior unsecured notes due in 2026, repay part of its senior secured revolving credit facility, and cover related expenses. Additionally, Chord Energy announced the appointment of Lara Kroll as its new Senior Vice President and Chief Accounting Officer, emphasizing its commitment to strong financial oversight.
Analyst firms have also weighed in on Chord Energy’s prospects. Mizuho (NYSE:MFG) Securities lowered its price target to $154 but maintained an Outperform rating, citing the company’s robust balance sheet and steady production outlook. UBS maintained a Buy rating and an $86 price target, highlighting the benefits of Chord Energy’s integration with Enerplus (NYSE:ERF) and potential value creation through strategic transactions. Meanwhile, Citi adjusted its price target to $120 while upholding a Buy rating, reflecting revised earnings estimates and discretionary cash flow projections.
These developments underscore Chord Energy’s strategic financial management and operational plans, providing investors with insights into the company’s ongoing efforts to enhance shareholder value.
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