On Thursday, Wells Fargo maintained its Overweight rating on Chevron (NYSE:CVX) and increased the stock's price target to $198 from $185. The adjustment reflects an updated oil price outlook and expectations for the company's upcoming earnings call. Wells Fargo anticipates discussions on various operational topics during the call, including Chevron's right of first refusal (ROFR) with Hess Corporation (NYSE:HES), updates on the Tengizchevroil (TCO) project, Permian Basin performance, working capital cadence, and any changes to the company's financial guidance.
Wells Fargo has also revised its Q1 2024 earnings per share (EPS) estimate for Chevron to $2.99, which sits slightly above the consensus estimate of $2.93. This increase is attributed to higher expected liquid realizations and minor adjustments to production volumes. However, these are somewhat balanced by anticipated weaker gas realizations and reduced margins in the U.S. downstream sector. The firm's forecasts for Chevron's full-year 2024 capital expenditures, production, and share buybacks are consistent with the guidance provided by the company.
The financial institution also predicts that Chevron will achieve the upper end of its share buyback guidance in the first quarter. The updated EPS estimate for Q1 2024 now stands at $2.99, rising from the previous estimate of $2.87. This revision is part of a broader modeling adjustment that takes into account the latest market conditions and company-specific factors.
Chevron's performance in the Permian Basin, a key oil-producing region, is among the specific areas of interest that Wells Fargo expects to be addressed. Additionally, the firm looks forward to any new information regarding Chevron's capital allocation, particularly in relation to the company's buyback program, which is a significant aspect of shareholder returns.
The updated price target and earnings estimate suggest a positive outlook for Chevron from Wells Fargo, as the company navigates the energy sector's dynamics and its strategic operations.
InvestingPro Insights
Wells Fargo's optimistic outlook on Chevron is supported by several key metrics and insights available from InvestingPro. Chevron's adjusted market capitalization stands at a robust $297.98 billion, underlining its significant presence in the industry. The company's P/E ratio, which is a measure of its current share price relative to its per-share earnings, is at a competitive 14.05, with an adjusted P/E ratio for the last twelve months as of Q4 2023 at an even more attractive 13.08. Additionally, the dividend yield as of the latest data is 4.06%, showcasing Chevron's commitment to returning value to its shareholders. This is further reinforced by the company's impressive track record of raising its dividend for 36 consecutive years and maintaining dividend payments for over half a century.
InvestingPro Tips also highlight Chevron's low price volatility and its status as a prominent player in the Oil, Gas & Consumable Fuels industry. Furthermore, the company's cash flows are strong enough to sufficiently cover interest payments, indicating a healthy financial state. For investors seeking more in-depth analysis and additional insights, there are over 6 more InvestingPro Tips available, which can be accessed through the dedicated Chevron page on InvestingPro.
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