Downgrade Sends Chevron Stock to Lowest Level In Months

Call buying has been notably popular on CVX

by Josh Selway

Published on Sep 6, 2018 at 2:05 PM

Chevron Corporation (NYSE:CVX) is down 3% at $115.42, following a downgrade to "neutral" from "buy" at BofA-Merrill Lynch. The brokerage firm also cut its price target to $135 from $150, citing a number of reasons it sees growth slowing for the company, including expiring contracts in the coming years. This price action has CVX stock set for its lowest close since early April, sending it far below recent support from the 320-day moving average.

chevron stock chart

Even though the equity is now down 7.7% year-to-date, most analysts have kept their bullish recommendations. By the numbers, 11 of the 14 covering brokerages have "buy" or better ratings on CVX. Moreover, the average 12-month price target is $146.37, a nearly 27% premium to current levels. It would seem the equity is vulnerable to more bearish analyst attention going forward.

Going off this, sentiment has also been bullish in the options pits. Data from the International Securities Exchange (ISE), Chicago Board Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) shows a 10-day call/put volume ratio of 2.67. Not only does this mean call buying has almost tripled put buying in recent weeks, but the reading ranks in the highest quartile of its annual range, showing that such a preference for calls is rare.


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