Chevron's Defenses Stand Strong Amidst Volatile Market Dynamics: JP Morgan Analyst

  • J.P. Morgan analyst John M Royall upgraded Chevron Corp CVX to Neutral from Underweight at an increased price target of $170 (from $161).
  • The analyst is bullish on CVX's highly defensive balance sheet, with below 5% net debt to capital and cash in hand of over $15B. 
  • Royall thinks the company's solid financial position will aid in maintaining the capital program and continuing the share repurchase program of $10 billion-$20 billion at a trough level of $60/bbl or lower.
  • Also ReadOil Stocks Surge As Crude Prices Jump 3.4%; Energy Market Flashes Positive Signals
  • CVX has less exposure to refining/chemicals business than its peers, so the analyst believes it is less exposed to challenging environments in downstream. 
  • Royall cites CVX's valuation factors in expected production growth in low-single-digits driven by higher margin assets, including Permian and Tengiz.  
  • Given the Tengiz project is nearing completion, the analyst sees lesser risks related to significant project execution and expects shorter cycles and less complex projects, such as GoM tie-backs, to drive growth.
  • The analyst expects revenues of adjusted EPS of $12.50 in 2023 and $13.50 in 2024. 
  • Also ReadChevron To Acquire PDC Energy In $7.6B Deal
  • Price Action: CVX shares are trading higher by 1.06% at $151.51 on the last check Wednesday.
  • Photo via Wikimedia Commons
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