JPMorgan analyst Arun Jayaram has updated his financial outlook for Chevron Corp, a leading energy company, in response to their recently unveiled 2026 budget and a shift in projected oil prices. These revisions, detailed in a recent note, account for new capital expenditure guidance and adjustments to future commodity valuations.
The central point of Jayaram's analysis revolves around Chevron's newly released capital expenditure (capex) projections for 2026. The company announced an organic capex budget of $18–19 billion, a figure that came in approximately 5% below the midpoint of their previously communicated long-term guidance of $18–21 billion during their recent investor presentation. This more conservative spending forecast has directly influenced the analyst's re-evaluation.
As a direct consequence of the updated capex guidance and a general downward trend in strip oil prices, Jayaram has significantly altered his earnings per share (EPS) estimates for Chevron. The projected EPS for 2025 has been reduced from $7.61 to $7.22, while the 2026 estimate saw a more substantial cut, dropping from $8.65 to $5.78 per share. These adjustments underline the financial impact of both internal company decisions and broader market forces.
Further impacting the revised estimates are the updated assumptions for future oil and gas prices. For 2025 and 2026, the analyst now forecasts oil at $65.11 and $57.72 per barrel, respectively, down from the earlier predictions of $66.20 and $63.12 per barrel. Similarly, natural gas prices have been recalibrated to $3.50 and $4.18 per thousand cubic feet for the same periods, differing from the previous outlook of $3.37 and $3.86 per thousand cubic feet. These shifts in commodity price expectations play a crucial role in shaping the profitability outlook for energy sector companies.
On the day of the publication, shares of Chevron experienced a slight decline, trading down by 0.43% to $149.31. This minor movement reflects immediate market reactions to such analyst revisions and broader sentiment within the energy market. Investors often closely monitor these types of analyst adjustments as they can signal changes in a company's financial trajectory and overall market valuation.
In summary, JPMorgan's analyst has significantly recalibrated Chevron's financial forecasts. This re-evaluation is based on the company's 2026 capital expenditure plans, which were more conservative than anticipated, and a downward revision in expected oil and gas prices. The updated projections show a notable decrease in anticipated earnings for both 2025 and 2026, reflecting a more cautious outlook on the company's near-term profitability in a dynamic energy market environment.