Goldman Sachs thinks Chevron is on the verge of a breakout. The firm upgraded shares of the oil giant to buy from neutral Monday and raised its price target to $187 from $166 per share. That implies roughly 18% upside from Friday’s close. Chevron has struggled this year, slipping 11.5%, while the S & P 500 is up 19% in that time. CVX YTD mountain Chevron stock has slumped more than 11% since January. But analyst Neil Mehta thinks now is the time to buy into the energy giant, Chevron now has a clear path to generating positive free-cash-flow in 2025 and 2026 and trades at a relatively cheap valuation. “We highlight that from 2024-2026, we expect a sharp improvement in ROCE [return on capital expenditures], production per share growth and FCF [free cash flow] per share, all enabling a top decile return of capital profile in the S & P100,” Mehta said. The analyst added that Chevron will also benefit from strong production from the Tengiz oil field, as well as a swath of other projects in the Gulf Mexico coming to fruition. “After more recent project developments (Tengiz major projects now at 98% completion), Permian volumes surprising to the upside … and closer timeline to certain Gulf of Mexico projects coming online, we believe some of these timing/upstream execution risks have been abated,” Mehta said. The analyst also said Chevron is trading at a more compelling valuation relative to peers. — CNBC’s Michael Bloom contributed to this report.
Goldman Sachs upgrades Chevron, says big gains are coming for the energy giant
About the author
