Chord Energy's Buyback Gamble: Is the Stock a Buy at $145?

Alright, folks, let’s talk about Chord Energy (CHRD)—a stock that’s caught in a classic Wall Street tug-of-war. RBC Capital just slashed its price target to $145 from $165, but kept its “Outperform” rating. What does this mean for investors? Let’s break it down like it’s a high-stakes poker game—and make no mistake, this is a gamble.

The Oil Price Headwind: A $60 WTI Ceiling Could Mean Trouble

First, the bad news: RBC’s price target cut hinges on sustained WTI oil prices below $60 per barrel. If crude stays in the basement, Chord’s drilling activity could slow, trimming revenue. But here’s the kicker—analyst Scott Hanold isn’t panicking. He’s betting management will fight back with aggressive buybacks, targeting a 100% near-term shareholder return.

Look at that chart. When oil dipped below $60 in Q1 2024, CHRD’s stock got crushed. But notice how it rebounded when buybacks were announced? This isn’t just a coincidence—it’s a strategy. Management is saying, “If the well runs dry, we’ll buy back shares to keep the stock afloat.”

The Buyback Lifeline: A Risky but Calculated Move

Chord’s buyback plan is bold. The company aims to return 100% of free cash flow to shareholders if oil stays weak. That’s a double-edged sword. On one hand, buybacks can artificially prop up the stock. On the other, they dilute future growth potential. But here’s the thing: with a $117.99 GuruFocus fair value estimate, there’s room to run.

The data shows Chord’s previous buybacks did lift the stock—temporarily. But this time, it’s not just a one-off; it’s a long-term strategy. If oil rebounds above $60, the buybacks could turbocharge earnings per share. If not? Investors might get a nice dividend-like payout in the form of share repurchases.

Analysts Are Split—but the Street Still Loves This Stock

Let’s talk numbers. Of 17 analysts covering CHRD, 12 rate it a Buy/Outperform, with an average target of $147.65. Even Bank of America’s “Hold” rating isn’t a death knell—it’s just cautious. Meanwhile, RBC’s Hanold, a top analyst with a 64% success rate, is sticking with Outperform.

The 72% upside potential from current levels ($85.77) is eye-popping. But remember: this assumes oil doesn’t stay below $60 indefinitely. TheStreet’s “Outperform” rating isn’t a guarantee—it’s a bet on management’s ability to navigate a volatile market.

The Bottom Line: Chord Energy Is a High-Risk, High-Reward Play

Here’s the verdict: Chord Energy is a speculative bet on two things—oil rebounding and management’s buyback prowess. The $145 price target is aggressive, but with a GF Value of $118, there’s still upside if shares stabilize.

If you’re an aggressive investor, this could be a diamond in the rough. But if you’re risk-averse? Stay on the sidelines. TheStreet’s consensus is bullish, but oil’s whims could derail this train. My advice? Dip your toe in now, but don’t go all-in until WTI climbs back above $65.

In the end, Chord Energy’s story is simple: “We’ll drill, baby, drill—or buy back shares if we can’t.” It’s a gamble, but with the right oil price catalyst, this stock could make believers out of skeptics. Just don’t let your greed override your common sense here.

Final Call: Chord Energy is a “Hold” for now, but keep a close eye on oil prices. If WTI breaches $60, it’s time to buy, buy, buy!

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Data as of [insert date]. Past performance does not guarantee future results.