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Chevron Reveals Its Hydrogen Investment Plans; Analysts Remain Bullish

Story Highlights

Chevron’s latest announcement about its investment plans in hydrogen is welcoming, especially in the wake of the rising need for renewable energy sources. More details on this front will be of interest to investors.

Chevron Corporation (NYSE: CVX) grabbed many eyeballs when one of its top executives hinted at its investment plan in hydrogen for this decade. Efforts to improve hydrogen capabilities align with Chevron’s initiatives to enhance its low-carbon technologies.

The news appeared in a Bloomberg report that cited the announcement was made by Chevron’s New Energies unit’s Vice President, Austin Knight, at the Hydrogen Summit held on Thursday. The event was organized by the Financial Times in London.

At the Summit, Knight communicated that Chevron is planning an investment of $2.5 billion this decade to boost its hydrogen capabilities. The company will concentrate on developing blue hydrogen using a steam methane reforming process on natural gas and green hydrogen from renewable energy.

Knight opined that the company wants “to be a part of” the ramp-up caused by “a shift to broader energy solutions with hydrogen and moving more into clean hydrogen.”

Shares of $289.6-billion integrated oil & natural gas producer decreased 5.4% to close at $155.48 on Thursday, and the stock is down another 5.6% today. Notably, the stock has increased 25% since the beginning of 2022.

Chevron in the News

On June 15, 2022, Chevron and six other major U.S. refining companies, including Exxon Mobil Corporation (NYSE: XOM), received directives from President Joe Biden to boost their capacities and increase the supply of diesel, gasoline, and other products.

The directives, which came via letters, were issued in the wake of rising gas prices in the country and aimed at boosting capacity to lower the financial burden on consumers.

On June 13, 2022, Chevron announced the successful completion of its pending acquisition of Renewable Energy Group, Inc. The $3.15-billion buyout strengthened Chevron’s renewable energy portfolio.

Wall Street’s Take

Chevron stock has a Moderate Buy consensus rating based on nine Buys, eight Holds, and one Sell. The average Chevron price target is pegged at $179.72, implying upside potential of 22.4% from current levels.

A few days back, Jason Gabelman of Cowen maintained a Buy rating on CVX while increasing his price target to $179 (21.6% upside potential) from $165.

Crown Wisdom

As per the TipRanks tool, the investor sentiment is positive for CVX. In the last 30 days, the number of TipRanks portfolios with investments in the stock has increased by 2.1%.

Conclusion

Chevron is working hard to expand its reach in low-carbon technologies. This week’s buyout and investment commitments to boost hydrogen capacity are steps towards this larger goal and will help enhance its competitive advantage.

Disclosure

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