On Thursday, Mizuho (NYSE:MFG) Securities updated its model for Chevron Corporation (NYSE:NYSE:CVX) shares, resulting in an increased price target for the oil giant's shares. The firm's analyst has adjusted the price target to $194.00, up from the previous $189.00, while retaining an Outperform rating on the stock.
The revision follows Chevron's third-quarter 2024 performance and is based on a net asset value (NAV) approach. The analyst highlighted Chevron's strong operational execution across its upstream portfolio, which includes the Permian Basin, the DJ Basin, the Tengizchevroil (TCO) project, and the Gulf of Mexico (GOM). These assets are being advanced towards free cash flow (FCF) generation.
Chevron is expected to achieve its target of 1 million barrels of oil equivalent per day (mmboe/d) from the Permian Basin slightly ahead of the year-end 2025 goal. This early achievement is attributed to operating efficiency gains and robust well performance.
As a result, Chevron anticipates a modest reduction in capital expenditures from $5 billion in 2025, with more significant decreases in subsequent years, positively impacting the asset's FCF.
In addition to the Permian progress, the TCO project is on schedule to commence operations in the first half of 2025, which is anticipated to enhance Chevron's cash contributions. The company has also successfully executed approximately $8 billion in asset sales, aiming for a total of $10-15 billion. Confidence remains high regarding the closing of the pending acquisition of Hess Corporation (NYSE:HES).
Chevron investors and market watchers are now looking forward to the announcement of the 2025 capital budget in December, which is expected to serve as the next significant catalyst for the company.
In other recent news, Chevron Corporation reported strong Q3 earnings with profits amounting to $4.5 billion or $2.48 per share, driven by a 7% increase in worldwide production. The company also announced record cash returns to shareholders and strategic plans for asset divestments and cost reductions. Analysts from TD (TSX:TD) Cowen and Truist Securities maintained a Hold rating on Chevron, with Truist Securities raising the stock's price target to $155.
Recent developments also include Chevron's response to tropical storm Rafael in the Gulf of Mexico, with the evacuation of non-essential personnel and securing of offshore platforms. Other energy companies, including BP (NYSE:BP), Equinor, and Shell (LON:SHEL), took similar precautions.
Analysts from both TD Cowen and Truist Securities highlighted Chevron's potential gains from the successful acquisition of Hess Corporation. However, they also noted challenges in California's downstream operations and uncertainty from the pending Hess acquisition. These are some of the recent developments involving Chevron Corporation.
InvestingPro Insights
Chevron's strong operational execution and positive outlook, as highlighted in the article, are further supported by real-time data from InvestingPro. The company's market capitalization stands at $288.46 billion, reflecting its significant position in the oil and gas industry. Chevron's P/E ratio of 15.95 (adjusted for the last twelve months) suggests a reasonable valuation relative to its earnings, which aligns with the analyst's optimistic price target increase.
InvestingPro Tips reveal that Chevron has raised its dividend for 37 consecutive years and maintained dividend payments for 54 consecutive years. This impressive track record of dividend growth, coupled with a current dividend yield of 4.13%, underscores the company's commitment to shareholder returns. This is particularly relevant given the article's focus on Chevron's improving free cash flow prospects from various assets.
Moreover, Chevron's status as a prominent player in the Oil, Gas & Consumable Fuels industry, as noted by InvestingPro, reinforces the significance of its operational achievements mentioned in the article, such as the progress in the Permian Basin and the TCO project.
For investors seeking a deeper understanding of Chevron's financial health and market position, InvestingPro offers 7 additional tips, providing a comprehensive analysis to inform investment decisions.
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