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Target Prices for Chevron ahead of Q1 Earnings

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Analyst ratings for Chevron

In this series, we reviewed the estimates for Chevron’s (CVX) 1Q18 earnings. We then looked at its segmental outlook and stock performance before its earnings release. Also, we calculated the stock range for Chevron for the 15-day period ahead of the earnings release. The earnings are expected to be published on April 27. Now, we’ll review the analyst ratings for Chevron.

In April 2018, 23 analysts rated CVX. Of the total, 18 analysts (78%) have assigned a “buy” or “strong buy” ratings, five (22%) have assigned “hold” ratings, and none of the analysts have assigned a “sell” rating on the stock.

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Ratings for Chevron have changed in April 2018 compared to April 2017 with the reduction in “hold” ratings. Recently, Wells Fargo raised its target price for Chevron from $138 per share to $153 per share. Similarly, Citigroup increased its target price on the stock from $125 per share to $133 per share. CVX’s mean target price of $137 per share implies a 15% gain from the current level.

But why do most analysts rate Chevron as a “buy?”

CVX plans to strengthen its financials by continuing its exercise of cost reduction, capex optimization, and divestments. Going forward, CVX expects to improve its cash flows by focusing on its sturdy upstream and robust downstream portfolios. So, with CVX’s strategy in place and focus on integrated growth, Chevron (CVX) could witness steep growth in earnings in 2018. Also, in terms of debt, Chevron has lower debt in its capital structure compared to peers. No wonder the majority of Wall Street analysts rate Chevron a “buy”!

Analyst ratings for peers

CVX’s peers Statoil (STO), Total (TOT), and YPF (YPF) have been rated as a “buy” by 20%, 33%, and 92% of analysts, respectively. ExxonMobil (XOM), BP (BP), and Royal Dutch Shell (RDS.A) have been rated as a “buy” by 33%, 42%, and 91% of analysts, respectively.

In the next part of this series, we’ll evaluate short interest changes in Chevron.

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