Should you buy Chevron shares after a JPMorgan downgrade?

On Wednesday, Chevron Corp (NYSE:CVX) shares edged 1.5% higher despite receiving a rating downgrade from JPMorgan analyst Phil Gresh. 

The analyst downgraded the stock from overweight to equal-weight, citing rising transition costs that the company has been unable to offset. Chevron is transitioning towards renewable energy sources amid changing market trends.

In a note to investors, the analyst wrote:

Gresh also pointed out the importance of balancing the shift to clean energy with meeting shareholder interest. He also lowers the CVX stock price target from $128 per share to $111.

CVX shares still look substantially undervalued

Although Gresh downgraded the Chevron stock from buy to neutral, his current price target of $111.00 per share is still significantly higher based on the CVX price of $97.86, as of this writing.

Moreover, Chevron shares still trade at an attractive forward P/E ratio of about 12.42 making the stock a compelling option for value investors. However, with analysts expecting CVX earnings per share to decline by a whopping 298% this year, growth investors could opt for alternatives in the market.

Therefore, the Chevron stock looks like an exciting short-term buy, ahead of a potentially disappointing end to the year. The stock could also gain the attention of dividend investors given its current dividend yield of about 5.47%.

Chevron’s short-term rebound seems poised to continue

Technically, Chevron shares seem to be trading within a descending channel formation in the intraday chart. However, the stock price recently bounced off the trendline support to surge towards $98.00 per share.

Moreover, CVX is yet to retest the trendline resistance, leaving room for more upward movement. In addition, the stock trades several levels below the 100-day moving average.

Therefore, traders can target extended short-term gains at approximately $100.90 or higher at $104.06. On the other hand, if the stock price pulls back, it could find support at $94.99 or lower at $91.83.

Bottom line: there is still time to buy CVX shares

In summary, Chevron shares seem to have recently bounced off a key support zone after a sharp pullback. Moreover, the current trend seems poised to continue before hitting key resistance levels.

Therefore, with the stock trading at a reasonable forward P/E ratio and yet to hit current analyst price targets, CVX shares could extend the current gains, creating short-term buying opportunities for investors.