Energy stocks are back in focus as Saudi Arabia and other OPEC+ nations announce surprise output cuts to drive oil prices. While the move could support the uptrend in shares of oil and gas companies like Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX), Scotiabank analyst Paul Cheng favors CVX over XOM and recommends buying the stock.
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Cheng upgraded Chevron stock to Buy from Hold as he sees favorable risk/reward near current levels. At the same time, the analyst downgraded XOM to Hold from Buy.
It’s worth highlighting that Exxon stock has outperformed Chevron over the past. Further, the oil and gas giant also handily surpassed the broader markets with its returns.
Cheng said that Chevron’s higher oil beta (which could show higher price movements) positions it well to benefit from the recent output cut and could help the company outperform peers. As for XOM, the analyst believes higher exposure to refined products could pressure its earnings.
While Cheng is bullish on CVX and downgraded XOM, let’s check what TipRanks’ datasets indicate about these energy stocks.
Which is Better, CVX or XOM?
TipRanks’ Stock Comparison tool shows that both stocks carry a Moderate Buy consensus rating. Further, the analysts’ average price targets for XOM and CVX stock reflect almost similar upside potential. Also, XOM and CVX stock sport an Outperform Smart Score of eight on TipRanks.
Bottom Line
While analysts are cautiously optimistic about XOM and CVX, and both stocks offer similar upside potential and dividend yields, CVX’s higher oil beta could drive its stock higher on an output cut. Further, Exxon stock has gained over 40% in one year compared to a 5% growth in CVX stock, indicating that Chevron has more room to run.
