Chevron (CVX) Stock Soars 3% on Bank of America Upgrade as Oil Remains Above $90
TLDR
- Bank of America increased its CVX price target from $188 to $206 and maintained a Buy rating due to elevated oil prices and geopolitical tensions.
- On March 2, Chevron reached a one-year high of $191.44, with an intraday increase of more than 3%.
- The acquisition of Hess Corporation has been completed, adding a significant stake in the Stabroek block offshore Guyana.
- In the last 90 days, insiders sold over 1 million CVX shares worth approximately $187 million.
- The Q4 EPS was $1.52, exceeding the consensus estimate of $1.44, and Permian output increased by 12% year-over-year.
This week, Chevron (CVX) received a boost after Bank of America raised its price target to $206 from $188, citing persistent geopolitical risk premiums and undervalued affiliate cash flows. The bank retained its Buy rating.
Analyst Jean Ann Salisbury contended that Wall Street has been underestimating both Chevron’s affiliate income and the staying power of high crude prices. Brent is trading above $90 per barrel, and Bank of America is now forecasting a $100 floor through Q3, its most bullish oil price prediction since 2022.
The stock responded rapidly. CVX reached a new one-year high of $191.44 on March 2, with a more than 3% intraday movement on the news. It last traded at $189.74 with a volume of over 4.5 million.
The broader context is relevant here. Tensions in the Middle East, including Iranian strikes on Gulf energy infrastructure, have kept a risk premium in oil. That premium shows no sign of diminishing, and Chevron is well-positioned to benefit.
also concluded its acquisition of Hess Corporation, securing a substantial stake in the Stabroek block offshore Guyana. According to Bank of America’s projections, that block could reach 1.3 million barrels per day by 2027. The deal also brings Chevron closer to parity with ExxonMobil’s Guyana footprint.
The company is simultaneously engaged in exclusive talks regarding Iraq’s West Qurna 2 oilfield and exploring production expansion in Venezuela. It has a busy pipeline of upstream growth.
Growth Drivers Stacking Up
On the production side, the Tengiz expansion in Kazakhstan is expected to add approximately 260,000 barrels per day in 2025, with first oil expected in Q2. Permian Basin output is on track to reach one million barrels per day, up 12% year-over-year in Q4.
A CPChem cracker expansion will be operational in 2026, which should enhance affiliate cash flows, one of the key areas where Bank of America believes the market has been overly cautious.
Free cash flow could reach $16.50 per share in 2027 at $70 Brent, approximately doubling current levels even under conservative assumptions. At $90 oil, the free cash yield exceeds 11%.
Chevron raised its quarterly dividend to $1.78, annualizing at $7.12 and yielding around 3.7%. The company has a $15 billion buyback program and has increased its dividend by 6% annually. The payout ratio currently stands at 106.91%, which some investors will closely monitor.
What’s Worth Watching
On the institutional front, Vanguard added nearly 28 million CVX shares in Q3 and now holds over 183 million in total. Norges Bank took a new $2.7 billion position in Q2. Institutional investors own 72.42% of the stock.
The flip side is that insiders sold over 1 million shares worth around $187 million in the last 90 days. Vice Chairman Mark A. Nelson sold 139,600 shares on March 2 alone, a 92% reduction in his position.
The Q4 earnings exceeded expectations, with an EPS of $1.52 compared to the consensus of $1.44. Revenue was $45.79 billion, slightly below the forecast of $48.18 billion and down 10.2% from the same quarter last year.
The FTC ruling on the Hess merger is expected around March 15. Chevron will report Q1 earnings on April 25. The company’s annual strategy update in June is expected to outline the capital return framework for H2 2026.
Wall Street consensus remains a Hold, with an average price target of $178.95, well below Bank of America’s $206 call.