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The bank downgraded CVX shares last year to reflect the surge in price, which further expanded the valuation premium gap to ExxonMobil (NYSE:XOM).
“Today, CVX’s valuation premium has narrowed meaningfully, while upside to our price target is essentially in line with our US group average following a period of underperformance,” Royall said in a client note.
The analyst also sees Chevron as well-positioned in a recessionary demand environment given the company’s “highly defensive balance sheet.”
“We think CVX has solid defensive characteristics in a market where defensiveness has become more important, and project execution risk is a less significant factor than it has been in nearly a decade, while valuation has normalized relative to the group and to XOM,” Royall concluded.
JPMorgan also boosted the price target by $9 to $170 per share, suggesting over 10% upside potential in the stock.
