When Chevron Corp (NYSE:CVX) reports first-quarter earnings on May 1, JPMorgan analyst Arun Jayaram expects “noisy” results.

The Chevron Analyst: Jayaram reiterated an Overweight rating and raised the price target from $181 to $216.

The Chevron Thesis: The restoration of the company's "key upstream and downstream profit drivers" is likely to provide "a strong foundation for earnings growth" over the remainder of the year, backed by elevated commodity prices and refining margins, Jayaram said in the note.

Higher commodity prices are driving earnings power, he added. Meanwhile, headwinds are reversing into tailwinds as Chevron restores production at TCO and Leviathan.

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The war in Iran is likely to affect Chevron far less than its peers, he added. But it’s worth noting that major oil producers, like Chevron, are facing significant disruptions that offset potential gains.

According to Bloomberg, ExxonMobil (NYSE:XOM) and Chevron each lost about 6% of global production in Q1. Shell's (NYSE:SHEL) gas output fell 5%, largely due to the effective closure of the Strait of Hormuz. Losses could worsen if the shipping route remains shut longer.

Jayaram expects Chevron to report Q1 earnings of 96 cents per share, significantly below Street expectations of $2.04 per share. This is due to "timing impacts associated with the sharp rise in commodity prices and LIFO (last in first out) inventory," which is estimated to represent a sequential headwind of $3.2 billion, he added.

Excluding this impact, adjusted earnings would have been around $2.57 per share, Jayaram said. He added that this headwind would reverse as an earnings tailwind in subsequent periods.

For the first quarter, the analyst estimates:

  • Adjusted upstream earnings of around $3.79 billion, above the previous quarter's $3.16 billion.
  • Adjusted downstream loss of $1.094 billion, versus earnings of $814 million in the previous quarter.  
  • Dividends of around $3.52 billion.
  • Share buybacks of approximately $2.5 billion.

He raised the earnings estimates for 2026 and 2027 from $7.27 per share to $15.44 per share and from $7.70 per share to $11.84 per share, respectively.

CVX Price Action: Shares of Chevron had declined by 1.49% to $187.52 at the time of publication on Friday.

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