Chevron shares rise supported by vaccine news

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 13, 2020
  • Chevron reported a 32.3% Y/Y decrease in revenues in Q3
  • The company expects to achieve strong revenue and earnings growth in Q4
  • If the price jumps above $100 resistance, the next target could be around $110

Chevron shares have advanced from $69 above $95 since the beginning of November, and the current price stands around $92. Analysts stay “bullish” on Chevron, and at the current market capitalization of $178B, this stock is not overvalued.

Fundamental analysis: Estimate for Q4 2020 earnings per share is $0.05

Chevron Corporation (NYSE: CVX) is an American multinational energy corporation that is active in more than 180 countries. Chevron is engaged in every aspect of the oil and natural gas; 70% of its reserves are concentrated in the U.S., Australia, Kazakhstan, and the Gulf of Mexico.

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The price of crude oil advanced above the $47 level last week, and this also supports the price of Chevron stock. The announcement that the Food and Drug Administration has authorized the Pfizer-BioNTech coronavirus vaccine for emergency use in the U.S. should have a positive impact on Chevron shares next trading week.

Another positive news is that OPEC+ members have agreed to small production hikes in January. OPEC will allow increasing output by 500K bpd starting from the next month because it hopes that a vaccine will significantly raise demand. 

Chevron is a stable company that has an incredibly low debt level compared to its peers. Chevron has steadily increased the dividend in the previous years, and the company currently pays a decent $1.29 per quarter.

Chevron reported a net loss of $207 million in Q3, but a mean estimate for Q4 2020 earnings per share is $0.05 or around $100 million in total.

Chevron reported a 32.3% Y/Y decrease in revenues in Q3, and Q3 GAAP EPS came in at -$0.12. Revenues have decreased mainly due to the Covid-19 pandemic, but despite lower revenues, Chevron enjoyed modest Q3 operating profit in oil and gas production by cutting operating expenses by 12%.

At the current market capitalization of $178B, this stock is not expensive, and maybe now is the right moment to trade Chevron shares. Analysts stay “bullish” on Chevron, and most of them are expecting an increase in oil prices by hopes of a faster demand recovery after the release of COVID-19 vaccines.

Technical analysis: Bulls are focused on breaking the resistance level at $100

Data source: tradingview.com

The current support levels are $90 and $80; $100 and $110 represent the resistance levels. If the price jumps above $100 resistance, the next target could be located at $110, but if the price falls below $80, it would be a firm “sell” signal and maybe a sign of the trend reversal.

Summary

Chevron reported a net loss of $207 million in Q3, but the company expects to achieve strong revenue and earnings growth in Q4. Analysts stay “bullish” on Chevron, and most of them are expecting an increase in oil prices by hopes of a faster demand recovery after the release of COVID-19 vaccines.

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