Analysts Just Shaved Their Chesapeake Energy Corporation (NASDAQ:CHK) Forecasts Dramatically
The analysts covering Chesapeake Energy Corporation (NASDAQ:CHK) delivered a dose of negativity to shareholders today, by making a substantial revision to their statutory forecasts for this year. Both revenue and earnings per share (EPS) forecasts went under the knife, suggesting the analysts have soured majorly on the business.
Following the downgrade, the consensus from three analysts covering Chesapeake Energy is for revenues of US$2.8b in 2024, implying a sizeable 55% decline in sales compared to the last 12 months. Statutory earnings per share are supposed to plunge 86% to US$2.55 in the same period. Before this latest update, the analysts had been forecasting revenues of US$3.3b and earnings per share (EPS) of US$2.96 in 2024. Indeed, we can see that the analysts are a lot more bearish about Chesapeake Energy's prospects, administering a measurable cut to revenue estimates and slashing their EPS estimates to boot.
View our latest analysis for Chesapeake Energy
Analysts made no major changes to their price target of US$101, suggesting the downgrades are not expected to have a long-term impact on Chesapeake Energy's valuation.
These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Chesapeake Energy's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 55% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 4.4% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 1.7% annually for the foreseeable future. So although its revenues are forecast to shrink, this cloud does not come with a silver lining - Chesapeake Energy is expected to lag the wider industry.
The Bottom Line
The biggest issue in the new estimates is that analysts have reduced their earnings per share estimates, suggesting business headwinds lay ahead for Chesapeake Energy. Regrettably, they also downgraded their revenue estimates, and the latest forecasts imply the business will grow sales slower than the wider market. We're also surprised to see that the price target went unchanged. Still, deteriorating business conditions (assuming accurate forecasts!) can be a leading indicator for the stock price, so we wouldn't blame investors for being more cautious on Chesapeake Energy after the downgrade.
Even so, the longer term trajectory of the business is much more important for the value creation of shareholders. We have estimates - from multiple Chesapeake Energy analysts - going out to 2025, and you can see them free on our platform here.
Of course, seeing company management invest large sums of money in a stock can be just as useful as knowing whether analysts are downgrading their estimates. So you may also wish to search this free list of stocks that insiders are buying.
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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
