Early in 2022, a surge in oil (CL1:COM) prices boosted shares of Chevron (NYSE:CVX). Recently, crude has retraced a significant amount of those gains and is again far below its June peak. Due to this, CVX has dropped by more than 10% from its June peak.
Is now a good time to invest in the oil giant’s stock, given the recent drop in crude prices?
Lower Oil Prices
From their highs in the middle of June, oil prices have fallen by almost 30% as investors have begun to doubt the medium-term demand for the commodity due to growth worries. Chevron (NYSE:CVX) has also fallen during this time due to this retreat.
Oil has dropped significantly from its June high of over $120 a barrel to its current price of $88 per barrel, below its 200-day moving average.
Oil prices hit a new low last week, falling to levels not seen before Russia invaded Ukraine in February.
In terms of supply and demand, recent numbers have indicated a rise in oil stockpiles. In contrast to the -0.250M expected and the -3.326M recorded last week, the Energy Information Administration announced that oil stockpiles were +8.8M barrels.
Despite the latest drop, Chevron (NYSE:CVX) is still up for the year, with a 36% increase predicted for 2022. The Nasdaq Composite (COMP.IND) is down 22.5%, the S&P 500 (SP500) is down 14.3%, and the Dow (DJI) is down 11.4%.
The sector as a whole has outperformed Chevron (NYSE:CVX) in 2022, with companies like ExxonMobil (XOM), Occidental Petroleum (OXY), Marathon Oil (MRO), Devon Energy (DVN), and ConocoPhillips (COP) leading the pack. Results for the first half of the year: XOM +53.5%, OXY +115.6%, MRO +60.9%, DVN +59.2%, and COP +56.5%.
Should You Invest in CVX Now?
Analysts have an optimistic inclination, but Wall Street is split on the near-term outlook for Chevron (NYSE:CVX). Seventeen out of the thirty-nine analysts polled by Seeking Alpha are optimistic. There are 11 “Strong Buy” recommendations and 6 “Buy” suggestions.
Eleven experts have assigned a Hold rating, while one has given a Sell.
On Monday, around lunchtime, Chevron (NYSE:CVX) stock was trading close to $162. Meanwhile, the consensus estimate of stock prices is $177.55.
Quant Ratings at Seeking Alpha are positive, labeling Chevron (NYSE:CVX) as a Strong Buy. Profitability is where the energy behemoth truly shines, earning an A+, while momentum and expansion receive C’s and valuation receives a C-.
Although most investors and analysts on Wall Street and Seeking Alpha’s Quant Ratings are bullish on Chevron (NYSE:CVX), some still have doubts. JR Research, a contributor to Seeking Alpha, rates CVX as a Sell and claims that the company’s momentum has slowed down following the release of its Q2 earnings.
In contrast, another SA writer, Leo Nelissen, calls Chevron (NYSE:CVX) a Strong Buy, noting that the firm “has a fortress balance sheet, continually declining operating expenses, and sky-high anticipated free cash flow for years to come.”
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