Chevron shares climbed Monday, after a Barclays analyst initiated coverage on the company with an overweight rating.
Barclays analyst Jeanine Wai said in a note to investors that the oil and gas company "is well-positioned” to generate substantial free cash flow to shareholders, and also fund its 3-4% five-year growth CAGR guidance. Wai set a stock price target of $145 on Chevron.
Wai also mentioned that even as Chevron has outperformed ExxonMobil by 11% over the last year, the stock still trades at a discount on an after-tax cash-blow basis in 2020, which should invert over the next year as the market factors in the sustainability of CVX's casg return program. Wai added, "while we think XOM's counter-cyclical investment approach will eventually pay off, it leaves a near-term FCF deficit after dividend at Brent prices less than $70."
Exxon is expecting its Permian holdings to be cash-flow positive in 2021 at $60 a barrel for Brent crude, while Chevron targets the same scenario for 2020 at $55 a barrel for Nymex-traded WTI oil, as indicated by the analyst.
The Barclays analysts initiated coverage of Exxon Mobil at equal weight with a price target of $73 a share.