Truist cuts Chevron price target on free cash flow concerns

Investing.com -- Truist Securities lowered its price target on Chevron Corp (NYSE: CVX) to $160 from $164 on weaker-than-expected free cash flow and potential headwinds in the company's downstream segment.

Chevron generated $5.3 billion in pre-working capital FCF last quarter, falling short of both Truist’s and Wall Street estimates. While production levels were in line with expectations, capital spending has slightly decreased, signaling slower growth in the Permian Basin.

Truist noted that Chevron’s acquisition of Hess (NYSE: HES) remains a key catalyst, with a decision expected from an international arbitration panel in May. A revised capital spending plan is likely after the ruling.

Despite challenges, the brokerage expects Chevron to improve free cash flow in 2025, driven by cost efficiencies and upside from its Tengizchevroil project in Kazakhstan. It also sees long-term potential in renewable fuels, hydrogen, and carbon capture, though the timeline for these projects remains uncertain.

Chevron repurchased $4.5 billion in stock last quarter and raised its dividend by 5% to $1.71 per share, reinforcing its commitment to shareholder returns even as it faces near-term financial pressure.

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