Analysts’ ratings for Chevron
Among the six integrated energy stocks we’re looking at in this series, Chevron has the third-largest market cap, of ~$237 billion. As shown in the graph below, 18 (75%) of the 24 analysts covering Chevron recommend “buy,” and six (25%) recommend “hold.” Meanwhile, BP (BP) and ExxonMobil (XOM) have received “buy” recommendations from 55% and 32% of analysts, respectively.
Target price changes
Recently, HSBC raised its target price on Chevron from $126 to $133. It recommends “hold” for the stock. Independent Research has increased its target price on the stock from $122 to $128. Analysts’ mean target price for Chevron is $138, which implies a 10% gain from its current price.
Why analysts like Chevron
Chevron’s diverse upstream portfolio is healthy and expanding. The company’s upstream volumes grew 7% last year to a record high, and the company expects its upstream volumes to grow 4%–7% this year. With these higher volumes, Chevron’s upstream earnings could rise if oil prices rise. The company’s downstream asset base is also expanding.
Chevron’s financials also improved last year, with its cash flow from operations rising to $30.6 billion. With its strong cash flow, Chevron paid higher dividends, funded its capital program, fortified its balance sheet, and rendered surplus cash to shareholders in the form of buybacks. Plus, Chevron’s debt position solidified last year, and the company expects this drive to continue this year as well.