Chevron stock gains after analyst turns bullish on valuation, dividend outlook

Shares of Chevron Corp. climbed 0.6% in midday trade Tuesday, despite some broader weakness in the energy sector, after Piper Jaffray turned bullish on the oil giant. Analyst Guy Baber at Piper Jaffray's Simmons & Co. raised his rating to overweight from neutral, and boosted his stock price target to $117--15% above current levels--from $110. He said execution remains a concern given ongoing uncertainty in the commodities markets, and the stock doesn't offer the deepest valuation discount in the sector. That said, Baber believes Chevron is "an attractive name to own" at this point in the commodities cycle. "More specifically, [Chevron] fulfills our criteria of offering impressive financial resilience and dividend sustainability alongside leading operational leverage to eventual oil price normalization and a seemingly more sustainable business model (among super majors)," Baber wrote in a note to clients. At current prices, Chevron's dividend yield of 4.2% is highest among Dow Jones Industrial Average components and above the SPDR Energy ETF yield of 2.79%. The energy ETF (XLE) was down 0.1% in midday trade. Chevron's stock has now run up 13.1% year to date, while the XLE has climbed 13.4% and the Dow has gained 6.6%.

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