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Investing.com -- HSBC upgraded Chevron to Buy, saying the stock’s recent underperformance has created an entry point.
Chevron’s target price was raised to $169 from $166 at HSBC.
The shares have lagged both integrated oils and the S&P 500 in recent months, with a sharper drop in the past week.
It linked part of the weakness to media reports about Chevron’s interest in Lukoil assets, including stakes in Kazakhstan and Iraq, and said the reaction was excessive.
Chevron is likely to remain disciplined on potential acquisitions and would pursue assets only if they add to per share metrics.
According to analysts at HSBC Chevron expanding in Kazakhstan could make operational sense given its presence there, though it would increase exposure to the Russia-controlled CPC pipeline. HSBC said it would be surprised to see Chevron enter Iraqi fields under legacy terms that carry low margins.
HSBC said it prefers Chevron’s mix of visible cashflow growth and lower spending, pointing to the company’s approach in the Permian.
It said shareholder distributions remain competitive even after the company twice disappointed the market on buybacks this year. The analysts at HSBC estimates an 8.5% total distribution yield in 2026, with a funding gap that is smaller than some peers at its $65 Brent assumption.
Across the sector, HSBC said European oil majors have outperformed despite a 16% drop in Brent this year, leaving valuations stretched. It expects European names to lag US peers in 2026 as oil and gas prices come under pressure and refining margins ease later in the year.
“We expect European majors to underperform and lag the US counterparts in 2026 on mean reversion, downward pressure on oil and gas prices, and an eventual drop in refining margins,” analysts said.
The brokerage cut Total to Hold and kept Hold on BP, Eni, Equinor, Exxon Mobil, OMV, Repsol and Shell. Galp remains its only other Buy.