Analyst Actions: Chesapeake Energy, Netflix, Cypress Bioscience
JP MORGAN UPGRADES CHESAPEAKE ENERGY TO OVERWEIGHT FROM NEUTRAL
Analyst Joseph Allman says Chesapeake Energy's (CHK) latest guidance shows its capital budget for 2009 and 2010 could be fully funded by cash flow from operations in a $7.50 gas world, or mostly funded in $6.00 gas world.
Allman notes previous guidance for 2009 and 2010 are heavily relied on asset sales to partially fund cash outflows; current guidance still includes asset sales, but cash flow would be used to improve liquidity. He says joint venture partnerships in Fayetteville, Haynesville, Marcellus Shale allow the company to drastically trim capex while maintaining double-digit production growth.
STIFEL NICOLAUS DOWNGRADES NETFLIX TO HOLD FROM BUY
Stifel Nicolaus analyst Scott Devitt downgrades Netflix (NFLX) as the shares now exceed his $25 price target. He notes that the shares are up 33% since late October, vs. 3% decline in Nasdaq.
Devitt says negatives facing the company include: 1) build-out of NFLX fulfillment network (95% of U.S. population reached in a 1-day turn) could allow customers to trade down within service levels without noticing change in service; 2) acquiring customers in this environment could prove more difficult and while NFLX subscriber model allows for stable, recurring revenue, it does require new net subscribers to generate growth.
OPPENHEIMER KEEPS OUTPERFORM ON CYPRESS BIOSCIENCE
Oppenheimer analyst Brian Abrahams says Cypress Bioscience (CYPB) and partner Forest Laboratories (FRX) announced positive results from a third Phase III study of milnacipran in fibromyalgia, which were highly statistically significant on both company-primary endpoints, didn't show any unexpected safety signals.
Abrahams says this should help put to rest any lingering concerns over the drug's efficacy and removes overhang that an aberrant result from this study could complicate the regulatory process. He believes that the positive outcome of this trial boosts likelihood of ultimate FDA approval.
He keeps $14 CYPB price target.