Chevron has entered the top 20 most expensive US companies. HSBC advises to buy its securities

Against the background of rising oil prices, the American oil company Chevron has entered the top 20 of the most expensive public companies in the United States, writes Barron's. On March 20, analysts of HSBC bank raised their recommendation on its securities from "hold" to "buy". Chevron, the strategists explained, is less exposed to risks associated with the Middle East, compared to another major U.S. oil company - Exxon, writes CNBC.

HSBC raised its target price for Chevron shares from $180 to $215, suggesting a potential upside of 7% from the last closing price. The bank noted that Chevron is significantly less dependent on oil from the Middle East than Exxon amid the ongoing conflict between the U.S. and Iran.

For example, Chevron's production in the Middle East is less than 200,000 barrels per day against Exxon's 900,000, said Kim Fustier, an analyst at the bank.

"We favor Chevron over Exxon given its unusually deep discount (12%) on the EV/DACF multiple - a metric that compares a company's value to its cash flow - to 2026, less dependence on the Middle East, and higher leverage, which increases the sensitivity of earnings and cash flow to higher oil prices," she wrote, referring to a higher ratio of debtChevron's debt-to-equity ratio, which allows its earnings and cash flow to grow faster when commodity prices rise.

Fustier also noted Chevron's strong cash flow and the company's earnings growth potential in 2026. The company has "above-average sensitivity to oil prices due to its lower effective tax burden (due to its regional asset mix) and high oil and gas exploration and production segment share in the business," the analyst added. As a result, HSBC significantly raised its 2026 earnings and cash flow forecasts for Chevron by 78% and 31%, respectively; this is one of the most significant forecast revisions among the companies the bank covers, CNBC points out.

In its latest fourth-quarter 2025 earnings report, Chevron reported lower quarterly net income amid falling oil prices, but maintained its outlook for strong operating cash flow for 2026 due to production growth and new projects including Guyana and Tengiz.

On March 20, the company's shares rose by 1.4% on the background of the rating upgrade from HSBC analysts. Since the beginning of the year, Chevron securities have added about 34% (Exxon Mobil has added 34.8% over the same period).

The growth in the value of securities amid rising energy prices allowed Chevron to enter the top 20 most expensive public companies in the United States on March 19, Barron's writes, noting that this is likely to improve the company's financial performance. At the close of trading on Thursday, March 19, Chevron's market capitalization - for the first time in history - exceeded $400 billion, according to Dow Jones Market Data, Barron's points out. At the time of publication, Chevron's market capitalization had already exceeded $407 billion, according to Yahoo Finance.

From February 27 - on the eve of the war with Iran - to March 19, Chevron shares added 7.9%, increasing the company's capitalization by $29.3 billion, notes Barron's. As a result, Chevron rose four positions in the ranking of the largest U.S. public companies, taking 20th place. Over the same period, the international oil benchmark Brent rose by 47%.

At the same time, Exxon Mobil has increased its market capitalization by $23.6 billion since the start of the conflict in Iran. However, unlike Chevron, the company has maintained its place at the 13th position among the largest publicly traded companies in the U.S., Barron's writes.

Brent crude oil futures rose 51% in March amid the conflict in the Middle East, while US WTI crude added more than 44% in March. In trading on March 20, Brent rose by almost 2% to $110 per barrel, April futures for WTI rose by 3% to $99.

The increase in HSBC's recommendation on Chevron's securities came after HSBC downgraded the U.S. oil company to "hold" in February due to the high valuation of the stock. However, "in the current environment of higher energy prices, Chevron's cash flow generation is improving significantly in the Permian Basin, Guyana and the Tengizchevroil (TCO) project," the bank said.

RBC on March 20 also raised the target price of Chevron shares from $195 to $200, keeping the recommendation to buy (Outperform rating). This assessment almost corresponds to the last closing price of the company's securities on March 19 (then they finished the trades at $201 per share).

Of the 26 analysts covering the company's stock, 16 recommend buying it, nine advise holding it in a portfolio and only one recommends selling it.

This article was AI-translated and verified by a human editor