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Investing.com - RBC Capital has reiterated an Outperform rating on Chord Energy Corp (NASDAQ:CHRD) with a price target of $130.00, representing a potential 22% upside from the current price of $106.42. According to InvestingPro data, the stock appears undervalued based on its Fair Value analysis, with 5 analysts recently revising their earnings estimates upward.
The firm’s analysis focuses on Chord Energy’s recent bolt-on acquisition, which RBC describes as reasonably valued with accretion primarily coming from high-grading and extending the company’s drilling inventory duration.
RBC notes that the acquired acreage is located in a core area that has seen limited recent drilling activity by the previous operator, potentially offering development opportunities for Chord Energy.
The investment firm expects Chord Energy will implement longer lateral drilling techniques on the majority of future development activity on the acquired acreage, a method the company has demonstrated enhances economic returns.
RBC also points out that Chord Energy’s shareholder returns are expected to decrease to over 50% of free cash flow until the company’s leverage ratio returns to below 0.5x.
In other recent news, Chord Energy Corporation has announced an upsizing of its senior unsecured notes offering to $750 million, up from the previously announced $500 million. The 6.000% senior notes, due in 2030, are expected to close on September 30, 2025, and will be guaranteed by Chord’s existing and future domestic subsidiaries. Additionally, Chord Energy has agreed to a $550 million acquisition of Williston Basin assets from Exxon Mobil’s subsidiary, XTO Energy. This strategic acquisition is set to be funded entirely through available cash and debt, with an effective date of September 1 and expected closing by year-end.
Analyst firms have responded to these developments with varying adjustments to their price targets for Chord Energy. BofA Securities has increased its price target to $123 while maintaining a Buy rating, following the acquisition announcement. UBS also raised its price target to $130, describing the acquisition as "opportunistic" and "strategic." Piper Sandler has set a new price target of $169, maintaining an Overweight rating, citing the addition of 48,000 net acres and low-decline production as key benefits of the acquisition. Meanwhile, TD Cowen reiterated its Hold rating with a $105 price target, reflecting a more cautious stance post-announcement.
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