Chevron (NYSE:CVX) is faring much better than its Dow counterparts this morning, with the index down more than 2%. The commencement of the Russian invasion on Ukraine has sent market participants into a frenzy. This is because Russia is the world’s third-largest exporter of oil and second-largest exporter of natural gas. So, if Russia decides to cut back fuel sales, more pressure will be placed on other energy companies to carry the load. This helps explain the relative strength of CVX stock this morning.
While Russia has not yet cut back fuel sales, the possibility still remains. Indeed, Russia could impose this policy in response to new sanctions. U.S. President Joe Biden has promised to hold Russia accountable for its actions and will unveil new sanctions today at noon. The sanctions will reportedly cut off Russia from advanced technology, place penalties on large financial institutions and sanction members of Russian President Vladimir Putin’s inner circle. However, sanctions have not deterred Putin so far, so it will be interesting to see Putin’s response.
With that said, investors are wondering if Chevron is a viable investment in this current atmosphere. Let’s jump right in.
3 Analysts Weigh In on Chevron Price Predictions
- Morgan Stanley has a price target of $166. Analyst Devin McDermott reiterated his “overweight” rating on CVX stock before Chevron’s analyst day on March 1. At analyst day, McDermott expects a “clear and consistent” playbook from management that shows a strategy of “capital discipline.” Over the next five years, the analyst expects Chevron to generate $135 billion in free cash flow (FCF), which represents about 50% of its current market capitalization.
- RBC Capital has a price target of $145. Analyst Biraj Borkhataria believes that Chevron is well positioned to take advantage of a strong commodity cycle over the next few years. The analyst also adds that the company’s business plans will allow Chevron to be a more stable investment when compared to peers. Therefore, Borkhataria states that the energy company warrants a premium valuation.
- Cowen has a price target of $140. Analyst Jason Gabelman raised his price target from $133 in anticipation of the Chevron analyst day. Gabelman expects the energy company to extend its previously guided 10% FCF compounded annual growth rate to 2026 instead of 2025. As a result, this would imply a FCF of $23 billion in 2026.
On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
