Chevron is an stock to watch as the global market remains undersupplied, according to Mizuho Securities. The firm upgraded the shares of the oil major to buy and raised its price target to $209 from $205. Mizuho’s new forecast now implies roughly 31% upside from Tuesday’s $159.24 close. Chevron has been under pressure this year, slipping nearly 12%. CVX YTD mountain Chevron shares are down this year. But analyst Nitin Kumar highlighted that the U.S. oil and gas space sector has outperformed the S & P 500 in since June by roughly 13%, aided in part by an uptick on commodity prices and worries over lower supply. West Texas Intermediate futures are up more than 16% since June. Kumar also noted Chevron will benefit from stronger productivity in the Permian Basin, which covers part of New Mexico and Texas. “Although oil mix has trended below the long term 50% indicated by CEO Mike Wirth on the earnings call, we expect it to increase as new well productivity improves,” Kumar said. The analyst added that company’s expansion of the Tengiz oilfield with the Wellhead Pressure Management project could create roughly $5 billion in free cash flow once the initiative takes hold in 2025. “This all provides substantial confidence in CVX’s ability to meet its upstream growth outlook,” he added. — CNBC’s Michael Bloom contributed to this report.