Bank of America (NYSE: BAC)’s Merrill Lynch unit has downgraded oil firm Chevron (NYSE: CVX) on Wednesday from neutral to buy, setting a new price target of $90.00 per share for the stock. The downgrade comes just one day after the company announced new plans to streamline the company’s organization and portfolio.
Chevron’s move to streamline its operations and improve its revenue will include staff reductions that will result in a cut of 2,000 positions.
Bank of America’s analyst commented that Chevron CVX “had little new to influence an investment case that has been reassuringly consistent in recent years.” Bank of America’s Merrill Lynch brokerage unit instead recommended that investors take a look as Exxon Mobile (NYSE: XOM) as a “better value” in the near term.
Many analysts are bearish about the oil industry as a hole, including Chevron and Exxon Mobil. Chevron faces a long-term resistance in the $75.00 region and is battling its 24 month moving average. Exxon Mobil has a similar story, but its stock is currently below its 20-week and 10-month moving averages.
The news isn’t all bad for Chevron and Exxon Mobil though. OPEC recently increased its forecast for global oil demand by 1/9th to 900,000 barrels per day. OPEC’s forecast means that each company will likely have higher demand for crude oil, but both companies will need significant help to break through their technical issues.
