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Investing.com -- Evercore ISI resumed coverage of Chevron (NYSE:CVX) with an Outperform rating and a $180 price target, saying the company is now better positioned for low-risk free cash flow growth following its acquisition of Hess (NYSE:HES).
The brokerage said Chevron already offered one of the clearest free cash flow inflection stories among large oil companies, but the addition of Hess enhances that outlook by giving the company greater exposure to high-return upstream assets.
Evercore sees Chevron generating more than 14% compound annual growth in free cash flow per share between 2024 and 2027, compared with mid-to-high single-digit growth expected for peers.
It also expects the company’s valuation gap with rivals to narrow as investors refocus on fundamentals after recent index rebalancing and merger-related arbitrage activity.
Chevron has executed $8 billion in divestitures and launched a $2–3 billion cost-cutting plan, moves Evercore said position the company to deliver on its projected $1 billion in Hess deal synergies within six months of closing.
The note highlighted Chevron’s capital spending discipline, forecasting capex at 50% of operating cash flow over the next three years, below most peers, and pointed to additional upside from existing assets in the Permian, DJ, and Bakken basins, as well as a chemicals joint venture operating near a cyclical low.
Evercore said the company has effectively “pre-paid” for future upstream growth at secure returns, and that the visibility of its multi-year capital plan should reassure investors even in the face of weaker oil prices.