Bank of America Downgrades ExxonMobil to Neutral Amid Shift Toward Chevron
On July 28, Bank of America downgraded its rating for ExxonMobil (XOM) from Buy to Neutral while maintaining a Buy rating on Chevron (CVX), making it the preferred oil stock. The move followed a significant rally in XOM’s share price—up nearly 15% since June—which outpaced the bank's original valuation thesis, prompting an upward revision of its target price to $158 from $154. The shift reflects concerns over unwinding geopolitical tensions that had previously driven oil prices higher. As diplomatic efforts with Iran eased fears around supply disruptions in the Strait of Hormuz, crude prices fell below $80 a barrel. This has impacted integrated majors like Exxon and Chevron differently due to their exposure: Exxon’s production is more directly affected by Middle East instability. Bank of America highlighted that while peace reduces risk for oil markets, it also removes a key tailwind for Exxon's valuation. The bank now sees greater upside in Chevron, which benefits from stronger refining margins and less direct exposure to conflict zones.
Topics: Bank of America Chevron energy stocks ExxonMobil oil majors