Chevron: Balanced Outlook Supports Hold Rating Amid TCO Recovery, Modest Growth, and Valuation Constraints

TD Cowen analyst Jason Gabelman maintained a Hold rating on Chevron today and set a price target of $168.00.

Jason Gabelman has given his Hold rating due to a combination of factors that balance Chevron’s positives and lingering uncertainties. He notes that the company’s shares outperformed the energy sector after earnings, helped by reassurances on the Tengizchevroil (TCO) project where production is set to return to full capacity in February and free cash flow guidance was kept intact, suggesting the recent outage will have minimal financial impact. Operationally, management reiterated its view on Venezuela and highlighted encouraging early signs from surfactant activity in the Permian, but provided no additional clarity on the West Texas data center initiative. The dividend increase came in below Chevron’s historical pattern, even though share repurchases were executed at the upper end of the planned range, and full‑year 2026 production guidance was only in line with expectations.

Gabelman also factors in strategic and valuation considerations that limit the case for a more aggressive rating. Market chatter about possible interest in acquiring certain Lukoil international assets in Iraq and Kazakhstan raises the risk of a cash-intensive transaction, at a time when he already sees modest underlying growth beyond this year. He raises his price target to $168 primarily by pushing his discounted cash flow model forward one year and incorporating stronger commodity price assumptions for 2026 and 2027, rather than because of a structurally improved outlook. His valuation is based on the net present value of free cash flow through 2030 and assumes a roughly 6.8% free cash flow yield in 2026 that is consistent with Chevron’s historical trading range and is expected to persist under a $65 Brent oil price scenario. Taken together, these elements justify maintaining a neutral, Hold stance rather than moving to a more bullish recommendation.

In another report released today, HSBC also downgraded the stock to a Hold with a $180.00 price target.