Oil major Chevron Corporation (NYSE:CVX)’s shares are up by 29% over the past year and by 31% year-to-date. It is one of Cramer’s top stocks in the sector, as in several appearances, the CNBC TV host has recommended Chevron Corporation (NYSE:CVX) over its peer firm Exxon. Among the reasons that Cramer has praised the firm include its dividend and its CEO, Mike Wirth. In his morning appearance on the 17th, he discussed Chevron Corporation (NYSE:CVX) in the context of oil exploration in the Permian and a recent share price target for the firm:
“Okay, so, I was reading RBN, which is just this great publication about oil. We now have three new pipelines, that transport natural gas to the Gulf. That’s, natural gas is the byproduct of oil. We’re gonna see another spike in how much oil we produce in the Permian. This is, Chevron, someone cut numbers for Chevron, what the heck, they cut the price target! Chevron’s like crushing it, we just had them on!”
On the 17th, Barclays had cut Chevron Corporation (NYSE:CVX)’s share price target to $208 from $216 and kept an Equal Weight rating on the stock. Barclays’ coverage came as part of its adjustments following the second quarter earnings season.
The debate surrounding Chevron Corporation (NYSE:CVX) is somewhat similar to the one for memory storage chip companies. The bulls and bears are divided on whether its recent production jumps are sustainable. As part of its second quarter earnings, Chevron Corporation (NYSE:CVX) reported that its upstream production jumped by 20% annually. Additionally, the firm has also improved its cash generation through achieving $3 billion in cost reduction ahead of schedule. Chevron Corporation (NYSE:CVX) has benefited from the Hess acquisition by generating $1.5 billion in synergies. Naturally, the strong financial. performance, which Cramer also alluded to, has raised concerns about its sustainability.
For instance, the Iran conflict has led to a surge in oil prices, which averaged at $104 per barrel in the second quarter. Additionally, delving deeper into the results, Chevron Corporation (NYSE:CVX)’s US refined product sales dipped by 4% annually to 1.32 million barrels per day while its international refinery crude outputs dropped by 10% to 598,000 barrels per day to indicate that perhaps the strenght is only limited to the firm’s upstream business.
Looking at the hedge funds, sentiment improved significantly in the first quarter. Insider Monkey’s data shows that while 86 out of 1,041 funds in Q4 had held a stake in the firm, the figure jumped to 103 out of 1,022 funds in Q2. A notable jump was in AQR Capital Management‘s stake, which grew by 269% annually to $912 million, while GQG Partners cut its stake by 58% to $716 million. The shares trade at similar multiples to Exxon’s and the same is true for short interest as a percentage of float.