On Monday, Chord Energy Corp (NASDAQ:CHRD) received a positive assessment from a major financial institution. Citi resumed coverage on the company, bestowing a Buy rating alongside a price target of $195.00 per share. The renewed interest from the analyst follows a period during which the firm had suspended its rating on Chord Energy.
The recommendation is based on a multiple of approximately 5.75 times the 2024 estimated adjusted cash flow (DACF). Chord Energy's updated model includes pro-forma estimates after its merger with Enerplus (NYSE:ERF), and reflects Citi's latest outlook on the company's forthcoming earnings. According to Citi's analysis, Chord Energy is anticipated to achieve an adjusted cash flow of around $494.7 million in the second quarter of 2024, with production levels expected at 204.3 thousand barrels of oil equivalent per day (boe/d), of which approximately 118.5 thousand barrels per day is oil.
Citi's target is slightly below the consensus estimate, which projects an adjusted cash flow of about $517.2 million. Additionally, Citi anticipates Chord Energy's capital expenditure for the same quarter to be roughly $353.2 million, which is above the consensus estimate of approximately $338.9 million.
The financial institution highlighted Chord Energy's solid position, noting its stable balance sheet and strong capacity for generating cash flow. Citi also pointed out the ample inventory runway available to the company, as well as the potential for additional benefits through synergy realization and improvements in drilling efficiency. These factors contribute to the company's favorable outlook despite the ongoing volatility in commodity markets.
In other recent news, Chord Energy's strategic acquisition of Enerplus has been a significant development, bolstering its presence in the Bakken shale region. Analysts from RBC Capital, Truist Securities, Piper Sandler, and Stifel have all maintained positive outlooks on the company, noting the potential for increased annual synergies and a robust capital return strategy. Despite minor production curtailments in the Marcellus region, Chord Energy's financial guidance remains steady, with projected earnings per share for 2024 and 2025 at $21.92 and $30.16, respectively.
Furthermore, cash flow per share is expected to rise, with estimates for the second quarter of 2024 at $10.12, and annual figures reaching $43.41 for 2024 and $54.07 for 2025. The company's gas production is forecasted to increase from 332 MMcf/d in the second quarter of 2024 to 413 MMcf/d by 2025.
InvestingPro Insights
Following Citi's positive outlook on Chord Energy Corp (NASDAQ:CHRD), real-time data from InvestingPro further illuminates the company's financial landscape. With a market capitalization of $6.99 billion and an attractive P/E ratio of 7.56, Chord Energy presents a value proposition to investors. The adjusted P/E ratio for the last twelve months as of Q1 2024 stands even slightly lower at 7.43, suggesting a consistent earning potential relative to its share price.
Revenue growth has been healthy, with a 5.11% increase over the last twelve months as of Q1 2024, and an impressive quarterly surge of 22.17% in Q1 2024. These figures complement the company's robust gross profit margin of 52.13%, indicating efficient management and a strong market position.
InvestingPro Tips highlight that analysts have revised their earnings upwards for the upcoming period, which aligns with the positive assessment from Citi. Additionally, Chord Energy's stock is noted for low price volatility, providing a relatively stable investment option. For those interested in deeper analysis, InvestingPro offers even more insights; there are 7 additional tips available to help guide your investment decisions. Take advantage of these insights and use the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription at InvestingPro.
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