UPDATE: BMO Capital Starts Chevron (CVX) at Outperform
- Stocks dip as earnings pour in, consumer discretionary lags
- UPDATE: Alphabet (GOOG) Tops Q3 EPS Views; Revs Strong
- Baker Hughes (BHI), General Electric (GE) in Partnership Talks, Not Merger Talks
- Cirrus Logic, Inc. (CRUS) Q2 Results and Guidance Beat Estimates
- Amazon.com (AMZN) Misses Q3 EPS by 26c, Offers Q4 Guidance
Get instant alerts when news breaks on your stocks. Claim your 2-week free trial to StreetInsider Premium here.
(Updated - September 13, 2016 8:53 AM EDT)
BMO Capital initiated coverage on Chevron (NYSE: CVX) with an Outperform rating and a price target of $120. Analyst Brendan Warn said he thinks Chevron has reached an inflection point and is entering a new era of higher-margin growth and decreasing pre-productive capital.
Warn wrote, "Our Outperform rating is based on Chevron's ability to:
- Generate positive organic FCF to cover the cash dividend at $50/bbl in 2017. Chevron is increasingly leveraged to a recovery in the oil price environment.
- Grow production at about 4% CAGR 2015-20E. Chevron is pacing some regional base asset investment, focusing on value over volume. Unconventional and brownfield will increasingly be prioritised.
- Improve cash margins. Our analysis shows that the delivery of existing conventional, LNG, and deepwater projects will improve cash margins by up to $4/bbl by 2020E.
- Deliver short-cycle unconventional production growth that can account for up to 25% of production by 2025E, increasing Chevron's capital flexibility.
- Increase capital flexibility with shorter-cycle investment opportunities, including the Permian, and improve balance sheet metrics.
- Decrease pre-productive capital employed (from 50% in 2015 to 25% in 2018E) and improve ROACE back to top-quartile performance."
Shares of Chevron closed at $102.25 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Mizuho Securities Downgrades Community Health (CYH) to Underperform
- Drexel Hamilton Raises Price Target on VMware (VMW) Following 3Q
- Jefferies Raises Price Target on Western Digital (WDC) to $75; Reiterates Buy
Create E-mail Alert Related CategoriesAnalyst Comments, New Coverage
Related EntitiesBMO Capital
Sign up for StreetInsider Free!
Receive full access to all new and archived articles, unlimited portfolio tracking, e-mail alerts, custom newswires and RSS feeds - and more!