UPDATE: Goldman Sachs Upgrades Chevron (CVX) and Adds Stock to Conviction Buy List
- Donald Trump Sworn in as 45th U.S. President
- Wall Street ends higher as Trump becomes president
- Walgreens Boots Alliance (WBA) Said to Face Antitrust Concern for Rite Aid (RAD) Fix - Bloomberg
- Bristol-Myers Squibb (BMY) Says It Won't Pursue Accelerated U.S. Regulatory Pathway for Opdivo Plus Yervoy in Lung Cancer
- Apple (AAPL) Sues Qualcomm (QCOM) Over Patent Royalties in Antitrust Case - Bloomberg
Get the Pulse of the Market with StreetInsider.com's Pulse Picks. Get your Free Trial here.
(Updated - October 31, 2016 8:32 AM EDT)
Goldman Sachs upgraded Chevron (NYSE: CVX) from Neutral to Conviction Buy with a price target of $118, implying upside of 14%. Analyst Neil Mehta thinks Chevron is at inflection in terms of production growth, free cash flow generation and the relative multiple.
Mehta explained, "First, we see a strong volume improvement story after a decade of relatively flat production, driven by: (1) Australia/Africa LNG projects, which now appear on track for growth; (2) the Permian in the US; and (3) long-term, from Tengiz in Kazakhstan. Second, as new projects ramp and oil prices improve to $50-$60/bbl WTI, we forecast a robust free cash flow improvement, more than covering the dividend yield of 4.2%. Third, we expect CVX will see further relative multiple expansion vs. XOM with ROCE improvement."
Discussing catalysts, the analyst said, "We see a series of positive catalysts over the next 12 months that we believe can help to unlock value at Chevron. In 4Q2017 results, we project a major step-up in production and cash flow from Gorgon and ALNG, providing evidence of LNG project execution. We expect the acceleration in asset sales, with as much as $8 bn in asset sales possible by YE2017, particularly in downstream. Additionally, we expect the company to provide more details on its Permian acreage and growth plans, which we view as a premier asset in the Chevron portfolio, particularly at the March 2017 analyst day."
Shares of Chevron closed at $103.82 yesterday.
Serious News for Serious Traders! Try StreetInsider.com Premium Free!
You May Also Be Interested In
- Skyworks Solutions (SWKS) PT Raised to $105 at Oppenheimer Following 1Q Report
- Deutsche Bank Sees 'Encouraging' Short-Term Set-Up in Valeant (VRX)
- Bassett Furniture (BSET) PT Raised to $28 at Stifel Following 4Q EPS Beat
Create E-mail Alert Related CategoriesAnalyst Comments, Analyst EPS View, Hot Comments, Hot Upgrades, Upgrades
Related EntitiesGoldman Sachs Conviction Buy List, Goldman Sachs
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!