Chevron Corporation (NYSE: CVX) shares have advanced more than 35% since the beginning of 2021 year, and the current price stands at $117.
Chevron continues to improve its position in the market, but the global COVID-19 pandemic continues to pose downside risks for the upcoming quarters.
Momentum remains strong
Chevron Corporation is an American multinational energy corporation engaged in every aspect of oil and natural gas; 70% of its reserves are concentrated in the U.S., Australia, Kazakhstan, and the Gulf of Mexico.
The company’s business has proven improvements throughout the third fiscal quarter, and Chevron reported strong results in October.
Total revenue has increased by 82.9% Y/Y to $44.71 billion, while the GAAP EPS was $3.19 (beats by $1.06). Mike Wirth, Chevron’s chairman, and the chief executive officer said:
Third-quarter earnings were the highest since the first quarter of 2013, largely due to improved market conditions, strong operational performance, and a lower cost structure. Our free cash flow during the quarter was the best ever reported by the company; we paid dividends of $2.6 billion, reduced debt by $5.6 billion, and repurchased $625 million of shares during the quarter.
The company’s management raised stock buyback guidance ranging between $3 billion to $5 billion per year, well above prior guidance of $2 billion to $3 billion per year.
At the beginning of December 2021, Chevron announced its plan to spend $15 billion on capital and exploratory projects in the 2022 fiscal year.
It is also important to mention that Chevron plans to invest $10 billion in lower-carbon energy businesses by 2028, and the company plans to increase renewable natural gas production to 40K MMBtu/day by 2030.
Chevron also expects to have increased hydrogen production to 150K metric tons/year, and according to the latest news, Caterpillar, BNSF, and Chevron announced a partnership for hydrogen locomotive demonstration.
The prototype of the hydrogen fuel cell locomotive will be demonstrated in the upcoming quarters, and Chevron will develop the fueling concept and infrastructure to support this project.
On the other side, the Coronavirus pandemic continues to pose downside risks together with the supply chains crisis, and if the situation gets worse, Chevron could have problems with the realization of all targets.
There has been no noticeable slowing effect on oil demand as yet, and the Organization of the Petroleum Exporting Countries expects that the oil demand should increase in the upcoming quarters.
Bulls control the price action
Chevron shares advanced more than 35% since the beginning of January 2021, and according to technical analysis, the bulls remain in control of the price action.
Rising above $120 supports the positive trend, and the next price target could be around $125.
Chevron Corporation shares have advanced more than 35% since the beginning of the 2021 year, and the company’s business has proven improvements throughout the third fiscal quarter. Chevron reported that it would continue with share repurchases in the upcoming years at an increased rate of $3-5 billion per year.