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Chesapeake shares rise on Citi's 'Buy' rating

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The Associated Press | October 24, 2013 03:02 PM EST | AP

Shares of Chesapeake Energy Corp. rose Thursday after a Citi analyst raised his investment rating on the oil and gas company, citing its potential growth and cost cutting initiatives.

THE SPARK: Citi analyst Robert Morris upgraded his stock rating on Chesapeake Energy to "Buy" from "Neutral" and raised its price target to $35 from $27.

The stock was also added to Citi's "U.S. Focus List."

THE BIG PICTURE: Chesapeake Energy named Robert Douglas Lawler as CEO in May, after the company's board ousted its previous CEO and founder earlier in the year.

THE ANALYSIS: "We believe the new management will continue to pursue an aggressive restructuring and cost reduction program while realizing significant efficiency improvements throughout its core regions," Morris said in a note to clients.

He also said that he expects oil production to rise. "We believe that production growth is actually poised to accelerate from this point forward and is underappreciated by the market," Morris said.

SHARE ACTION: Up $1.10, or 4 percent, to $28.39 in afternoon trading Thursday. Its shares are up 41 percent from a year ago.