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What Analysts Think about Chevron

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Analyst ratings for Chevron

As of now, we’ve reviewed the integrated energy companies with more than 70% “buy” ratings, which are YPF (YPF), Royal Dutch Shell (RDS.A), and Suncor Energy (SU). Now we’ll look at the middle group among the top ten, beginning with Chevron (CVX).

Chevron is an American integrated energy company. It has upstream and downstream business segments. The company’s market cap of around $227 billion places it third among the top ten integrated stocks with the most “buy” ratings.

The analyst rating graph above shows that 17 (or 68%) out of the 25 analysts covering CVX have rated it a “buy” in December 2017. Another seven analysts, or 28%, have rated CVX as a “hold.” And the remaining one analyst rated Chevron a “sell.” The other companies in the middle of our top ten list include Cenovus Energy (CVE), BP (BP), and ENI (E). CVE, BP, and ENI have been rated as a “buy” by 50% of analysts each. We’ll discuss these companies in detail in the following parts.

Changes in analyst ratings and target price

Compared to December 2016, analyst ratings for Chevron have changed. This time last year, CVX had the same amount of “buy” ratings but more “hold” ratings. It is also the first company so far in this series to currently have a “sell” rating.

In the past one year, Chevron’s mean target price has risen 7% to $125 per share, implying an only 4% gain from the current level. The implied gains have expanded from December 2016 to December 2017 due to a steeper rise in Chevron’s mean target by 7% compared to a rise in its stock price by 5%. Also, since October 2, Chevron stock has risen 1.2%.

Valuations

Chevron trades at a forward PE of 23.0x below the average forward PE of the ten integrated energy stocks of 23.8x. However, Chevron trades at 7.1x its forward EV-to-EBITDA, above the peer average of 6.1x.

Chevron trades above the average forward EV-to-EBITDA likely due to Chevron’s ability not only to survive the oil price cycle but also prepare for planned growth. Its robust upstream portfolio focuses on the high-return downstream value chain, and its decent leverage position attests to this. Also, Chevron is set to benefit from any surge in oil price with its expanding upstream production.

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