2 Energy Stocks J.P. Morgan Calls "Overbought"

A drop in crude prices is also weighing on the two securities today

Deputy Editor
Mar 14, 2022 at 9:42 AM
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Energy stocks Chevron Corporation (NYSE:CVX) and Occidental Petroleum Corporation (NYSE:OXY) rare subjects of fresh downgrades from J.P. Morgan Securities after the analyst said the two stocks are now overbought after several months of outperforming their peers. The two stocks were downgraded to "underweight" from "neutral" on Friday, while a drop in crude prices is putting even more weight on the shares. At last check, CVX is down 2.9% at $165.80, while OXY has shed 2.5% to trade at $56.52. 

Separately Warren Buffet announced on Saturday that he has added to his original $4.5 billion stake in Occidental Petroleum with an additional $1.5 billion, or 27.1 million shares. Plus, Credit Suisse lifted its price target to $50 from $35 on Sunday. This put OXY's 12-month consensus price target at $52, which is a 10.3% deficit to current levels. Reflecting this lukewarm sentiment, nine of the 16 in coverage carried a "hold" or worse rating on OXY coming into today. 

Analysts have been a bit more bullish on Chevron stock. Of the 17 covering the stock, 13 said "buy" or better, prior to today's session, though its 12-month consensus price target of $159.29 is a 6.8% discount to Friday's close. 

The stocks have both seen unprecedented surges up the charts, as anxieties over a supply shortage, among other factors, drive up fuel prices and energy stocks. CVX just came off a record high of $174.76 on March 10, and has added over 45% in 2022. It's also worth noting that its 14-day Relative Strength Index (RSI) of 87 puts the stock deep in "overbought" territory. 

A look at OXY shows a similar RSI of 84, while the stock just hit a two-year high of $59.60 on March 10. The security has nearly doubled since the start of this year, up 99.9%, while it sports a year-over-year lead of 87%. 

 




 
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