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RBC maintains Outperform on CHRD with steady target

Published 16/10/2024, 10:36 pm
CHRD
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RBC Capital maintained its positive outlook on Chord Energy Corp (NASDAQ:CHRD), reiterating an Outperform rating alongside a steady price target of $185.00. The firm's analysis included newly published estimates for 2026, forecasting that Chord Energy will maintain a stable production trajectory for oil. This projection is in line with RBC Capital's anticipated oil prices of $65-66 per barrel for West Texas Intermediate (WTI) in 2026.

The analysis by RBC Capital suggests that Chord Energy's current stock price offers an attractive average yield of 11% for both 2025 and 2026 estimates. The firm expects that Chord Energy will persist with its strategy of returning 75% of its profits to shareholders, a policy facilitated by the company's leverage, which remains comfortably below 0.5 times.

RBC Capital's outlook is bolstered by the expectation that Chord Energy's commitment to shareholder returns will continue unabated. The company's strategy is especially notable as it is projected to provide one of the highest per-share returns to investors among the firms covered by RBC Capital.

The endorsement of Chord Energy's financial approach comes at a time when the energy sector is navigating a complex market environment. Chord Energy's consistent production levels and robust shareholder return strategy position it favorably in RBC Capital's analysis, reflecting confidence in the company's performance and management.

Chord Energy's Q2 2024 results exceeded expectations, with oil volumes hitting the upper end of guidance and a significant free cash flow of about $263 million. The company also announced an increase in dividends, set at a base of $1.25 per share and a variable dividend of $1.27 per share, representing 75% of the adjusted free cash flow.

Mizuho Securities maintained an Outperform rating on Chord Energy, focusing on the successful integration of Enerplus (NYSE:ERF) assets and the company's 2025 plans featuring reduced spending and increased stock buybacks. RBC Capital Markets also reaffirmed their Outperform rating on Chord Energy, highlighting potential catalysts for the company's third-quarter 2024 earnings.

BMO Capital Markets sustained its Outperform rating on Chord Energy, highlighting the company's robust and resilient balance sheet and plans to enhance capital efficiency by 2025. Jefferies initiated coverage with a Hold rating and a price target of $160, noting Chord Energy's successful use of 3-mile laterals and the need for clarity on the longevity of its core acreage.

InvestingPro Insights

Chord Energy's financial metrics and market position align closely with RBC Capital's positive outlook. According to InvestingPro data, the company boasts a high dividend yield of 8.86%, supporting RBC's projection of attractive shareholder returns. This is further reinforced by an InvestingPro Tip indicating that Chord Energy "pays a significant dividend to shareholders."

The company's P/E ratio of 6 and adjusted P/E ratio of 8.09 for the last twelve months suggest that the stock may be undervalued, potentially offering an attractive entry point for investors. This is consistent with another InvestingPro Tip noting that the stock is "trading near 52-week low," which could present a buying opportunity if the company's fundamentals remain strong.

Chord Energy's financial health appears robust, with an InvestingPro Tip highlighting that "cash flows can sufficiently cover interest payments." This supports RBC Capital's observation about the company's comfortable leverage position.

For investors seeking more comprehensive analysis, InvestingPro offers 12 additional tips for Chord Energy, providing a deeper understanding of the company's market position and potential.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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