Analyst: Higher Prices Could Boost Oil Stock

The analyst did however cut its price target on the shares

Deputy Editor
May 23, 2023 at 9:19 AM
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HSBC just upgraded blue-chip oil giant Chevron Corporation (NYSE:CVX) to "buy" from "hold" today, citing potential tailwinds from rising crude prices. While the analyst did cut its price target to $189 from $193, Truist Securities upped its price objective to $194 from $190.

Despite the optimism, CVX is unchanged ahead of the market open, last seen at 152.44. It's worth noting that Chevron stock recently appeared on our list of worst stocks to own in May and currently stands 9.6% lower for the month. The $152 area has served as a safety net on a closing basis since mid March. 

Coming into today, covering analysts were evenly split on the oil stock, with nine rating it a "buy" or better versus nine that said "hold or worse. Meanwhile, the 12-month consensus target price of $189.58 is a 24.4% premium to last night's close. 

The options pits, however, lean more bullish. At the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX), CVX's 10-day call/put volume ratio of 2.60 ranks higher than 91% of annual readings. This suggests long calls have been more popular than usual in the last 10 weeks.

Speculating on Chevron stock's next move with options might be a prudent play, too, especially considering the equity's Schaeffer's Volatility Index (SVI) of 25% stands higher than just 24% of readings from the past 12 months. This means options traders are pricing in relatively low volatility expectations for CVX at the moment. 


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