What happened
Energy giant Chevron (CVX 0.37%) was a hit with investors on Thursday, chiefly for two reasons. The first was an uptick in oil prices, a development that usually pushes oil and gas stocks higher. The second was a bullish analyst note on the company, the second in as many days. With these tailwinds, Chevron's share price inched up by 1.7% on the day, in favorable contrast to the 0.8% drop of the S&P 500 index.
So what
Although oil prices tapered off by late afternoon, they were still up on the day. The spot price for Brent crude was up by $0.34 to nearly $83 per barrel. All else being equal, a rising price means higher profitability, particularly for global oil behemoths like Chevron.
Meanwhile, the company's stock received a price target bump from Josh Silverstein of UBS, who upped his estimate for the stock's fair value to $209 per share. Previously, he had pegged it as being worth $202. He maintained his buy recommendation.
This closely followed a Chevron upgrade on Wednesday by Silverstein's peer, Mizuho's (MFG -1.03%) Nitin Kumar. On the back of raised estimates for Brent crude prices in the second half of this year, and global prices in 2024 and 2025, Kumar shifted his recommendation on Chevron stock. To him, it's now a buy, with a new price target matching Silverstein's at $209 per share (previously $205).
Now what
As the price of oil rises, fears of a global recession (or at least a slowdown) are fading. This dynamic plays very well for oil companies, particularly in a world that remains ever hungry for their products. Now is a good time to be invested in the sector.
