Chevron Shares Fall About 3% After Q1 Revenue Disappoints

Chevron shares fell about 3% in pre-market trading on Friday after the oil company reported lower-than-expected revenue in the first quarter of this year as ongoing downstream in margin and volume effects resulting from the pandemic and winter storm Uri offset gains from higher oil prices.

The second-largest U.S. oil producer reported adjusted earnings of $1.7 billion, $0.90 per share, in first-quarter 2021, down about 30% compared to adjusted earnings of $2.5 billion, $1.31 per share, in first-quarter 2020. That was in line with Wall Street’s consensus estimates of $0.88 per share.

However, sales and other operating revenues rose from $31.5 billion in the year-ago period to $32.03 billion, missing the market expectations of $32.5 billion.

Chevron shares fell about 3% to $103.85 in pre-market trading on Friday.

Analyst Comments

“Slight Negative Chevron (CVX) earnings came in line with expectations though could be perceived less favorably compared to beats by peers. FCF was in line with consensus as lower CFO offset lower capex. Cash flow drag from affiliates was higher than expected, though this could have been offset by lower TCO co-lending, and we look for more color on the earnings call. Maintain Outperform, $113 PT,” said Jason Gabelman, equity analyst at Cowen.

“We do not expect any update on TCO FGP this quarter, as the company has previously noted. An update may not come until 3Q21 earnings. Topics of interest on the call include any changed guidance on cash flow drag from distributions & TCO co-lending and timing around re-initiating the buyback.”

Chevron Stock Price Forecast

Sixteen analysts who offered stock ratings for Chevron in the last three months forecast the average price in 12 months of $118.94 with a high forecast of $130.00 and a low forecast of $101.00.

The average price target represents an 11.26% increase from the last price of $106.90. Of those 16 analysts, 10 rated “Buy”, six rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $127 with a high of $167 under a bull scenario and $69 under the worst-case scenario. The firm gave an “Overweight” rating on the oil company’s stock.

“Strong free cash flow with attractive growth. CVX offers peer-leading cash flow anchored by low-risk investments, a differentiated value proposition in the sector – particularly in the current uncertain macro backdrop. NBL acquisition adds quality, capital-efficient assets and is accretive to financial metrics,” said Devin McDermott, equity analyst at Morgan Stanley.

“Attractive dividend yield. A low corporate breakeven and strong balance sheet supports CVX’s ~5% dividend yield and makes the strategy resilient through the cycle. Differentiated, low-royalty Permian position. CVX holds 1.7 MM acres in the Permian basin containing >21 Bboe of resource. Importantly, >80% of CVX’s Permian acreage is low or no royalty, improving returns and cash flow.”

Several other analysts have also updated their stock outlook. HSBC raised the stock price forecast to $126 from $125.5. Scotiabank lifted the target price to $118 from $115. Raymond James lowered the target price to $120 from $122. Jefferies upped the price target to $109 from $101. Simmons Energy increased the price target to $126 from $113.

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