Chevron (CVX) shares rose after Bank of America Securities upgraded the oil titan’s stock to buy from neutral, seeing the stock’s 39% drop this year as a buying opportunity.
His share-price target is $96.
Chevron stock "has moved back to levels where the risk/reward is attractive,” analyst Doug Leggate wrote in a commentary cited by CNBC.
He doesn’t expect investors to turn more bullish on the company until the hefty oil- inventory surplus shrinks.
U.S. petroleum stocks, excluding the Strategic Petroleum Reserve, totaled 1.4 billion barrels in the week ended Sept. 18, according to the Energy Information Administration. Energy demand has slumped since the coronavirus pandemic throttled businesses and consumer demand for fuel.
Chevron shares recently traded at $74.34, up 3.5%.
In July, Chevron agreed to buy oil driller Noble Energy (NBL) for $5 billion in stock in what marks the biggest oil-patch tie-up since the coronavirus pandemic took hold. Including Noble's debt, the total enterprise value of the deal is $13 billion.
Buying Houston-based Noble, which has both U.S. and international operations, complements Chevron’s presence in the oil-rich deposits of the DJ Basin of Colorado and Permian Basin, which spans West Texas and New Mexico. It also gives the San Ramon, Calif., oil giant assets in the eastern Mediterranean and West Africa.
Chevron posted a wider-than-expected loss for the second quarter and warned oil demand won't return to pre-pandemic levels until at least year-end.
Chevron said its adjusted loss was $1.59 a share, wider than the 92 cents a share Wall Street consensus forecast. Revenue fell 55.5% to $16 billion, missing analysts' estimates of a $22.1 billion tally.