Pro Analysis

Goldman adds Chevron to conviction list, says risks to the stock are 'overstated'

A floorhand operates a Chevron oil drilling rig near Taft, California.
Chip Chipman | Bloomberg | Getty Images
A floorhand operates a Chevron oil drilling rig near Taft, California.

Shares of Chevron will rally more than 14 percent in the next year as its underperformance creates a "compelling entry point" for investors, according to Goldman Sachs.

The investment bank added Chevron to its Americas conviction buy list with a price target of $142. The target is 14.2 percent above Monday's closing price.

Chevron has lagged the S&P 500 and the energy ETF this year despite a 20 percent jump in the price of Brent crude oil, analyst Neil Mehta said in a note Monday. The bear case for Chevron consists, in part of, poor earnings execution over the past year and a lack of preparedness for changes to the International Maritime Organization's (IMO) new emissions standards coming online in 2020.

"We believe many of these risks are overstated and are also more than priced into the stock," Mehta said.