On Thursday, Chord Energy Corp (NASDAQ:CHRD) experienced a 3% decline in its stock price following the company's earnings release and management conference call. In contrast, its peers saw a 4% increase. RBC Capital has reiterated its Outperform rating and $200.00 price target for CHRD, despite market reactions to potential concerns over the company's capital levels for 2025.
During the conference call, management discussed proforma capital levels, combining CHRD and ERF, which are currently at $1.5 billion for an output of 152-153 million barrels per day (Mb/d) of oil. This figure led to some assumptions regarding the capital pacing for 2025, although it was not explicitly clarified whether this would be the target for the year. RBC Capital, based on discussions with the company, clarified that the $1.5 billion is not the set goal for 2025. Moreover, this estimate does not take into account the synergies that have already begun to materialize.
RBC Capital suggests that a more accurate capital range for CHRD in 2025, factoring in the synergies, would be $1.40-1.45 billion. This would support maintaining production levels at 150-155 Mb/d of oil. The firm's stance is that the current dip in CHRD's stock price presents a buying opportunity. They also expect that Chord Energy's management will likely increase stock buybacks to capitalize on the stock's relative performance.
The price target set by RBC Capital indicates a continued positive outlook for Chord Energy, despite the initial negative reaction from the market to the earnings call. The firm's confidence in the company's financial strategy and the expected benefits from synergies point to a potential recovery and growth in CHRD's stock value.
In other recent news, Chord Energy Corp has been the focus of various analyst assessments and corporate developments. Truist Securities adjusted the company's price target to $223 while maintaining a Buy rating, following a financial model update. The new target is based on a 5.0x multiple applied to the firm's 2025 estimated EBITDAX and a Free Cash Flow to Enterprise Value Yield assumption of 11.0%.
Citi also resumed coverage on Chord Energy, assigning a Buy rating with a price target of $195.00 per share. This evaluation is based on the company's projected adjusted cash flow of approximately $494.7 million in the second quarter of 2024.
In addition, RBC Capital maintained its Outperform rating and $200.00 price target for Chord Energy, acknowledging the successful completion of the merger with Enerplus (NYSE:ERF). The merger bolsters Chord Energy's presence in the Bakken shale region and is expected to deliver increased annual synergies.
Piper Sandler increased its price target to $233, maintaining an Overweight rating on Chord Energy shares. The firm noted Chord Energy's resilient production figures amidst a general decline in basin well performance.
InvestingPro Insights
Following the recent performance of Chord Energy Corp (NASDAQ:CHRD), InvestingPro data reveals a market capitalization of $9.46 billion and a Price-to-Earnings (P/E) ratio of 7.16, which adjusts to 10.15 based on the last twelve months as of Q2 2024. The company's revenue growth for the same period stands at 11.59%, with a significant quarterly increase of 47.69%. This financial health is further evidenced by a robust gross profit margin of 51.32% and an operating income margin of 31.64%.
InvestingPro Tips suggest that despite recent downward revisions by seven analysts for the upcoming period, Chord Energy operates with a moderate level of debt and cash flows that can sufficiently cover interest payments. Additionally, the stock is trading near its 52-week low, which, combined with the metrics above, may present a buying opportunity as suggested by RBC Capital. With an InvestingPro Fair Value estimate of $212.00, there's an implied potential upside based on the stock's previous close of $153.48. For those considering CHRD, there are 9 additional InvestingPro Tips available that could provide further insight into the company's performance and potential.
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