Scotiabank Predicts Chevron Will Outperform Exxon As Oil Prices Rise

Over the last year, shareholders in Exxon Mobil Corp., the world's largest oil and gas company, have had to watch with some envy as the performance and stock prices of Chevron Corp. have surged and reached new highs. It is estimated that the roles of the two banks will soon be reversed, according to Scotiabank.

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With Exxon's share price rising by more than 33% over the last 12 months, it has ranked second on the S&P 500 Energy Index, outperforming Chevron whose share price has remained relatively unchanged during the same period. Despite rising oil prices and the possibility of refining margins being squeezed, analysts see Chevron shares reaching all-time high because of rising oil prices.

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Adding a $200 price target to Chevron's stock, Scotiabank analyst Paul Cheng upgraded the stock from sector performance to outperform. Bloomberg data shows that Wall Street now expects Chevron to reach $190, a record price for the company. 

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As a result of OPEC+'s announcement to reduce its output by 1.6 million barrels per day, he believes that Chevron could perform better than Exxon as a result of its higher oil leverage, a comment he wrote Thursday in his research note. 

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According to Cheng, Exxon has a much greater exposure to refined products than it did before, which could adversely affect earnings given the fact that we believe the refining market will reach an inflection point in the second half of April. As a result, he downgraded the company from outperforming to performing. The report also highlighted that Exxon could be faced with a "real risk" because of its reported interest in purchasing Pioneer Natural Resources.

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