Chevron’s Hold Rating: Balancing Attractive Yield with Cautious Outlook Post-HES Acquisition

In a report released today, Jason Gabelman from TD Cowen maintained a Hold rating on Chevron (CVX – Research Report), with a price target of $150.00.

Jason Gabelman has given his Hold rating due to a combination of factors surrounding Chevron’s current financial and operational outlook. The company’s decision to cut its buyback was anticipated by the market, which may have contributed to the stock’s outperformance. Despite this, Chevron’s distribution yield remains more attractive compared to its large-cap peers, yet the anticipated free cash flow yield by 2026 post-HES acquisition is estimated to be around 6%.
Gabelman also notes that while Chevron’s new buyback range suggests a higher return yield than its peers, the sustainability of this pace is contingent on future market conditions, including the closure of the HES deal. The forecasted free cash flow generation in 2026, along with the expected arbitration outcome, suggests that investors might remain cautious in the near term. Furthermore, the limited near-term free cash flow accretion from the HES acquisition, coupled with lower expected earnings and buyback pace, supports the Hold rating with a reduced price target of $150.

In another report released today, Barclays also maintained a Hold rating on the stock with a $152.00 price target.

Based on the recent corporate insider activity of 47 insiders, corporate insider sentiment is negative on the stock. This means that over the past quarter there has been an increase of insiders selling their shares of CVX in relation to earlier this year.