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Investing.com - Evercore ISI has resumed coverage of Chevron (NYSE:CVX) with an Outperform rating and a $180.00 price target. According to InvestingPro data, the stock currently trades below its Fair Value, with analysts’ targets ranging from $124 to $186.
The research firm highlighted Chevron’s free cash flow outlook, noting the company offers "one of the clearest FCF inflection stories amongst the Big Oils" as major projects start and capital obligations decrease. The company’s strong financial health is reflected in its "GOOD" overall score from InvestingPro, with particularly robust cash flow metrics and a moderate debt level of just 20% debt-to-equity.
Evercore ISI views the Hess acquisition as improving Chevron’s trajectory over the next 3-5 years, targeting "the cleanest most attractive growth asset in the global upstream" while maintaining industry-leading barrels per share.
During the Hess transaction waiting period, Chevron executed $8 billion in divestitures and launched a $2-3 billion cost reduction program, with the anticipated $1 billion in deal synergies expected approximately six months after closing.
The firm projects a 14%+ three-year compound annual growth rate for free cash flow per share from 2024-2027 at current strip pricing, compared to peers in the "mid to upper single digits," identifying this as a key differentiator for Chevron.
In other recent news, Chevron Corporation has completed its significant $55 billion merger with Hess Corporation (NYSE:HES), resulting in the elimination of 575 jobs in the Houston area. This development was confirmed through a filing with the Texas Workforce Commission. Following the merger, John B. Hess, former CEO of Hess Corporation, has been appointed to Chevron’s Board of Directors. In the wake of the acquisition, Hess Midstream Operations LP received an upgrade from S&P Global Ratings to ’BBB-’ with a stable outlook, as the company is expected to maintain a favorable debt to EBITDA ratio through 2025. Additionally, UBS has reiterated its Buy rating on Chevron, maintaining a price target of $177.00, reflecting confidence in the company’s post-acquisition prospects. The acquisition also led to Hess Corp ’s replacement by Block Inc. in the S&P 500 index, as announced by S&P Dow Jones Indices. These are the latest developments surrounding Chevron and its recent activities.
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