What happened
Energy sector giant Chevron (CVX 1.20%) wasn't looking very mighty on the stock exchange Thursday. The company's share price sank by over 1% on an analyst's price target decrease. While the cut was fairly modest, it exacerbated the bearish feeling on the stock following a big investor's divestment several days earlier.
So what
Thursday morning, Piper Sandler prognosticator Ryan Todd lowered his Chevron fair value assessment to $196 per share. Previously, he had tagged it at $203. He still feels it's worthy of investment, as he maintained his overweight (buy) recommendation on the shares.
The reasoning behind Todd's move wasn't immediately clear, but it isn't the only slight downward shift in recent weeks. At the beginning of May, Truist Securities' Neal Dingman also snipped his price target, lopping $3 from it to land at $190.
Unlike his more bullish Piper Sandler peer, Dingman had and maintained a hold recommendation on Chevron. He's concerned with the decline of free cash flow due to ramped-up capital expenditures, although he's encouraged that this spend is being channeled mainly into higher-margin activities.
A stronger influence on Chevron sentiment, though, is undoubtedly the recently revealed sell-off by Warren Buffett's investment vehicle Berkshire Hathaway. On Monday, a regulatory filing showed that Berkshire recently cut its stake in the energy company by more that 30.5 million shares (to land at a total holding of just over 132.4 million).
Now what
No investor, of course, should base their buy, sell, or hold decision entirely on the moves of an analyst or a famous financier. Chevron did show declines in key metrics in its most recently reported quarter, but demand for oil remains strong and the company still generates a great deal of cash. It's still a top pick for many investors with oil and gas stocks in their portfolios.
