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Chesapeake Energy stock has ‘tremendous upside’ despite falling natural gas prices

By:
on Jan 5, 2023
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  • Chesapeake Energy CEO says natural gas prices are still profitable.
  • He continues to see tremendous upside in Chesapeake Energy stock.
  • "CHK" is currently down about 15% versus early November 2022.

Natural gas prices have tanked sharply to around $3.75 in less than a month. Still, Chesapeake Energy Corporation (NASDAQ: CHK) CEO does not expect that to be a threat for his company.

Price of natural gas is still profitable

According to Nick Dell’Osso, natural gas is still trading at a price that’s well above what’s typically seen as “bad” for the industry. Therefore, he’s convinced that Chesapeake Energy will remain strongly profitable moving forward.  

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For us to be around $4.0 is still a great price for our company. We still see a huge future for natural gas as the supply and demand fundamentals are tremendous for the long term. So, we’re excited about the price today.

The Nasdaq-listed firm is expected to report its Q4 results in February. Consensus is for it to earn $3.61 a share this quarter – a more than 50% growth on a year-over-year basis.

Wall Street currently has a consensus “buy” rating on the Chesapeake Energy stock.

CEO’s outlook on the Chesapeake Energy stock

Dell’Osso sees significant upside in natural gas prices in 2025 and beyond. This year, though, he expects the commodity to remain around the current level (near $4.0).

Over the past two months, Chesapeake Energy stock has lost roughly 15%. Sharing his outlook on the share price, the Chief Executive said on CNBC’s “Squawk Box”:

If you look at the price that’s implied in our stock, it’s always been in the $3.0s at best; low-threes. So, we still think there’s a tremendous amount of upside to our stock price in the current natural gas environment.

On average, Wall Street expects this natural gas stock to be worth $144. That implies about a 70% premium on its current price.