Analysts Still Like Chevron, Cite Strong FCF & Balance Sheet As Key Amid OPEC And Recession Fears

B of A Securities analyst Jean Ann Salisbury maintained a Buy rating on Chevron Corporation CVX following mixed first-quarter earnings reported on Friday.

The oil and gas giant reported revenues and other income of $47.61 billion, which missed the consensus of $48.09 billion, while adjusted EPS of $2.18 came in line with the consensus.

The analyst noted that Chevron announced a decrease in its share buyback run rate to $2.5-$3 billion per quarter (from $4-4.75 billion prior) while maintaining its capital expenditure guidance.

She says the adjustment was widely anticipated and aligned with their estimates.

Salisbury writes that mounting concerns surrounding OPEC’s actions and the potential for a recession have created headwinds for the energy sector, particularly impacting production companies.

Despite these clear macroeconomic challenges in the oil market, she expects CVX’s increasing free cash flow generation and strong financial position to make it a relatively appealing investment within this space.

RBC Capital Markets analyst Biraj Borkhataria also reiterated an Outperform rating with a price forecast of $175.

The analyst says CVX’s results and management commentary suggest a deliberate and prudent approach, a strategy that has historically benefited the company.

He adds that the decision to decrease share repurchases will likely slow the re-leveraging process.

Borkhataria further writes that the company’s balance sheet retains sufficient strength to sustain its revised, consistent buyback program throughout market cycles.

Investors can gain exposure to CVX via EA Series Trust Strive U.S. Energy ETF DRLL and SPDR Select Sector Fund – Energy Select Sector XLE.

Price Action: CVX shares are down 1.48% at $136.45 at the last check on Monday.

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