Chevron stock outlook: RBC sees a 20% upside

Chevron Corporation (NYSE: CVX) has lost more than 10% in less than two months but an RBC Capital Markets analyst says a recovery may be brewing.

Chevron stock can withstand macro volatility

On Thursday, Biraj Borkhataria upgraded the oil and gas behemoth to “outperform” and raised his price objective to $180 – about a 20% upside from its previous close.

He agreed that the macro environment could remain volatile moving forward but said:

Weaker end product demand and OPEC+ managing oil market leaves CVX’s upstream heavy weighting well-placed. This combined with its fortress balance sheet should prove defensive.

The bullish call arrives about a month after the energy company reported market-beating results for its fiscal first quarter. Versus its year-to-date high, Chevron stock is down nearly 20% at writing.

Chevron recently bought PDC Energy Inc

Borkhataria is constructive on the oil stock also for how meticulous the company has been in terms of mergers and acquisitions. His research note reads:

In our view, the company’s ability to execute on this front has been impressive, and importantly, it’s both about what the company has done, and what it has chosen not to do.

Last week, Chevron said it will buy PDC Energy Inc for $6.3 billion – an acquisition the multinational expects will boost its annual free cash flow by $1.0 billion assuming Brent at $70 a barrel.

Remember that Chevron stock currently pays a rather lucrative dividend yield of near 4.0% that makes up for another significant reason to have it in your investment portfolio.