On Wednesday, Mizuho Securities adjusted its outlook on Chevron (NYSE:CVX) shares, raising the price target to $200 from the previous $195, while reiterating a Buy rating on the stock. The firm's update was prompted by the latest evaluation of Chevron's year-end 2023 reserves. Chevron had initially performed well, outpacing its integrated oil company (IOC) peers by approximately 4% following strong fourth-quarter 2023 earnings.
However, the sentiment shifted on Sunday, February 26, when Chevron filed an S-4 document related to its proposed acquisition of Hess Corporation (NYSE:HES). Since the filing, Chevron's stock has lagged behind its peers, with a roughly 6% underperformance. Market participants have expressed concerns over the completion of the deal, particularly in light of ExxonMobil (NYSE:XOM) and its partners' move to arbitration, claiming their 'right of first refusal' on Hess' 30% stake in a project in Guyana.
Despite the uncertainty surrounding the acquisition, Mizuho's base case assumes that the transaction will be finalized by September 30, later than the initially anticipated June 30 closure. The firm sees a potential 19% upside to Chevron’s standalone net asset value (NAV), even if the deal with Hess Corporation does not proceed as planned.
Mizuho continues to endorse Chevron as a Top Pick in the sector, suggesting confidence in the company's value and prospects. The price target enhancement reflects Mizuho's updated projections and the underlying strength observed in Chevron's performance and assets.
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