By Chevron Corp. (CVX) shares have faced significant challenges in recent weeks following a quarterly earnings miss and news of an upcoming merger with Hess Corp. (HES). The stock has plummeted approximately 15%, leading BofA Securities’ Doug Leggate to assert that this sharp decline appears exaggerated and presents an attractive opportunity for investors.
In a note on Monday, Leggate upgraded his rating on Chevron’s stock to buy and raised his price target to $200, up from $190. This revised target implies a potential upside of about 38% compared to Monday’s prices. Leggate highlights the potential for recognition of value driven by favorable growth, dividend capacity, and portfolio depth, provided the merger closes as planned.
Year-to-date, Chevron shares have experienced a decline of roughly 20%, in stark contrast to the 8% gains seen in the S&P 500 index (SPX), and the 2% loss in the Dow Jones Industrial Average (DJIA) which includes Chevron as a component.
Considering the current market conditions, BofA Securities views this weakness in Chevron’s stock as a tactical opportunity to upgrade its rating from neutral. The revised outlook reflects their belief that the investment case for Chevron has been reset, and investors stand to benefit from its potential growth and attractive dividend capacity.
In summary, despite recent setbacks, Chevron Corp. presents an enticing opportunity for investors seeking potential long-term gains. The forthcoming merger and promising fundamentals underpin BofA Securities’ decision to upgrade Chevron’s stock to a buy rating with a price target of $200.
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