Chesapeake Energy stock
Chesapeake Energy (CHK) stock took a slight dip last week, falling 7.7% in the week ended January 19 compared to the week ended January 12. The decline was likely due to the dip in crude oil prices (USO)(UCO).
In the week ended January 19, crude oil prices fell ~1.4% while natural gas prices (UNG)(UGAZ) fell ~0.5%.
Year-over-year, crude oil prices have risen 21.10% while natural gas prices are still 4.3% lower compared to a year ago.
On a year-over-year basis, CHK stock has declined ~43%. The energy sector benchmark ETF, the Energy Select Sector SPDR ETF (XLE), rose 0.28% year-over-year. In comparison, the broader market S&P 500 SPDR ETF (SPY)(SPX-INDEX) rose ~24.5%.
In 2017, CHK had been weighed down by lower oil prices in 1H17, weak natural gas prices throughout the year, and a heavy debt burden.
What to expect for CHK in 2018
While oil prices have improved, as we saw above, debt remains a concern. One of the key strategies CHK will implement to address this problem is asset sales. CHK management has announced a goal of $2 billion–$3 billion in asset sales over the next several years.
Plus, CHK believes it could achieve free cash flow neutrality in 2018 at $50 oil prices and $3 natural gas prices.
Even as CHK has been aiming for oil-focused growth, a sustained increase in oil and natural gas prices in 2018 would also benefit the stock.
Approximately 65.5% of Wall Street analysts have rated Chesapeake Energy (CHK) stock a “hold” while ~10.3% have rated it a “buy.”
On January 19, the short interest ratio (short interest as a percentage of float) for Whiting Petroleum (WLL) stock was ~16.4%. In January 2017, the short interest ratio for Whiting Petroleum stock was ~3.1%.
Most analysts reduced their target prices on FedEx after the delivery giant trimmed its fiscal 2019 earnings outlook.
US new vehicle sales stood at 1.26 million units in February 2019, down about 2.8% from 1.30 million units in February 2018.
On March 15–22, US crude oil May futures rose 0.4% and closed at $59.04 per barrel.
Micron has given a weaker-than-expected revenue forecast for the third quarter but expects memory chip demand to recover in the fourth quarter.
Signet Jewelers (SIG) is expected to report weak fourth-quarter results on April 3.
The EIA is scheduled to release its oil and natural gas inventory data on March 27–28, which could be a short-term driver for oil and natural gas prices.