Market Overview

UBS Upgrades Chevron, Praises Stable And Low-Risk Business

Share:
UBS Upgrades Chevron, Praises Stable And Low-Risk Business

Chevron Corporation (NYSE: CVX)'s stock has taken a beating in the past year after a rally in oil prices failed to have legs. However, one analyst said the sell-off has finally created a buying opportunity.

The Analyst

UBS analyst John Rigby upgraded Chevron from Neutral to Buy rating and set a $135 price target for the stock.

The Thesis

Traders may have missed the bottom in Chevron stock, which has bounced back by 4.2 percent in January, but Rigby said the 2019 strength has helped reassure investors in a volatile oil market.

“The volatility in the macro environment emphasizes the value of a conservative, through-cycle, sustaining business and financial model however – one clearly embodied in Chevron's strategy,” Rigby wrote in a note.

Rigby said Chevron should have no problem funding both its dividend and its organic capex over the next year even if Brent crude oil prices fall below $50 per barrel. He said Chevron’s share buyback program highlights the company’s impressive free cash flow generation, even in a difficult environment. Management has also made clear growing the dividend is a top priority.

Chevron’s upstream-focused, oil-oriented portfolio and its industry-leading Permian assets also emphasize the stock’s low-risk nature.

Rigby is anticipating oil prices will continue to trade in a range between $60 and $80, and Chevron’s production outlook through 2022 is safe. He said this type of reliability and stability is exactly what oil investors are looking for in the current climate.

Price Action

Chevron traded higher by 2 percent to $114.14 Friday afternoon.

Related Links:

Raymond James: Higher Oil Prices Are Bad News For Exxon Investors

The Election's Impact On Energy, Fracking

Latest Ratings for CVX

DateFirmActionFromTo
Aug 2019Initiates Coverage OnOutperform
Aug 2019Initiates Coverage OnOverweight
Jul 2019MaintainsOverweight

View More Analyst Ratings for CVX
View the Latest Analyst Ratings

Posted-In: John Rigby UBSAnalyst Color Upgrades Price Target Analyst Ratings Best of Benzinga

 

Related Articles (CVX)

View Comments and Join the Discussion!

Latest Ratings

StockFirmActionPT
ELMDDougherty & Co.Initiates Coverage On12.0
MRNSCantor FitzgeraldAssumes7.0
MNRLCapital One FinancialInitiates Coverage On23.0
SONVertical GroupUpgrades
UNPMorgan StanleyMaintains136.0
View the Latest Analytics Ratings
Don't Miss Any Updates!
News Directly in Your Inbox
Subscribe to:
Benzinga Trading Daily
Get pre-market outlook, mid-day update and after-market roundup emails in your inbox.
Market in 5 Minutes
Everything you need to know about the market - quick & easy.
Daily Analyst Rating
A summary of each day’s top rating changes from sell-side analysts on the street.
Thank You

Thank you for subscribing! If you have any questions feel free to call us at 1-877-440-ZING or email us at vipaccounts@benzinga.com

Consumer Discretionary Q4 Earnings: U.S. Consumer Appears Strong Amid Heightened Global Uncertainty

Golf Equipment Sales Finally On The Upswing — What's Behind The Comeback?