Chesapeake Energy (CHK -6.68%) is downgraded to Sell from Hold with a $2 price target at Jefferies, which says it is wary of CHK's valuation and leverage, among other factors.
While CHK has made great strides to simplify its corporate structure and asset base, Jefferies says the company remains weighed by a ~$9B debt load, high fixed cost burden and comparatively weak inventory of high return drilling inventory; the firm notes CHK's discouraging recent commentary on excess amounts of produced water on Oklahoma assets.