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Piper Jaffray's Energy Desk Upgrades Chevron, Says Name Is Attractive At Current Point In Oil Cycle

Piper Jaffray's Energy Desk Upgrades Chevron, Says Name Is Attractive At Current Point In Oil Cycle - Chevron Corporation NYSE:CVX, ConocoPhillips NYSE:COP

After a rough couple of years in the oil market, it may finally be time to buy Chevron Corporation CVX 0.75%. Simmons & Company analyst Guy Baber has upgraded the stock from Neutral to Overweight ahead of what the firm sees as a long-term oil price recovery.

Although Chevron doesn’t offer investors the value Royal Dutch Shell plc (ADR) (NYSE: RDS-A) offers at its current share price, Baber sees Chevron as a long-term buy.

“CVX offers impressive financial resilience and dividend sustainability alongside leading operational leverage to eventual oil price normalization and a seemingly more sustainable business model,” Baber explains.

Related Link: Why Is The Oil Market Taking So Long To Recover?

He notes that oil major stocks aren’t cheap based on conventional metrics, but Simmons does see pockets of value.

The firm names Suncor Energy Inc. (USA) SU 0.54% as its top overall pick. Baber believes Suncor’s ability to generate FCF, as well as the stocks relative underperformance in 2016, has it set up best headed into 2017.

Simmons is also Overweight on Marathon Oil Corporation MRO 1.87%, its top dividend E&P stock pick.

When it comes to value, Baber names Overweight-rated Royal Dutch Shell as the ideal play.

Simmons is also overweight Hess Corp. HES 0.46% due to its exploration potential, and sees Skipjack as a possible catalyst.

Baber also says the firm is “warming up” to Neutral-rated ConocoPhillips COP 0.05% but is waiting for the oil market to stabilize a bit more before deeming the stock a buy.

Disclosure: The author is long RDS.B.

DateFirmActionFromTo
Aug 2016PiperJaffrayUpgradesNeutralOverweight
Jul 2016JefferiesMaintainsBuy
Apr 2016BarclaysMaintainsEqualweight

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