Chevron's (CVX) strong refining margins and higher crude prices prompted a boost in earnings estimates, UBS Securities said Wednesday in a report.

UBS increased its Q3 EPS forecast to $4.93 from $4.15, ahead of the $4.86 Wall Street consensus, and expects $2.7 billion in share buybacks during the quarter.

Q3 downstream earnings were forecast to rise to $4.9 billion from $4.6 billion in Q2 as stronger refining margins provide material tailwinds in both US and international markets, the report said.

UBS projects Q3 upstream earnings of $6.25 billion, down from $8.26 billion in Q2, as lower commodity prices, reduced volumes and negative timing effects outweigh the benefit of higher crude realizations, with volumes estimated at 3.95 million barrels of oil equivalent per day, compared with 4.07 million previously.

Headwinds in the quarter include lower ethylene chain margins, expected to be a $100 million to $200 million drag, and negative timing effects totaling about $500 million, UBS said.

Q3 results are expected in late October.

UBS raised its price target on Chevron stock to $235 from $220 and maintained its buy rating.

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