From Notable Calls:
Morgan Stanley is upgrading Chesapeake Energy (NYSE:CHK) to Overweight from Equal-weight with a $34 tgt.
CHK is levered to the 2010 recovery in natural gas prices; Morgan Stanley expects the shares to remain “gas beta” near term. Beyond their view of improving natural gas fundamentals, they see merit to CHK’s operating plan and expect the strategy to support outperformance. CHK is focusing on the lowest-cost US resource plays and has secured capital from partners to accelerate development....
...Two Aspects to Morgan Stanley's Call:
I) Leverage to the recovery: CHK is “gas beta.” They like the risk/reward of a commodity that should enjoy better fundamentals in 2010, an outlook not fully in the stock. Firm expects the recent decline in rig count to result in production declines (visible in May/June),
tighter balances, and higher natgas prices....MORE
