NEW YORK (AP) -- A Morgan Stanley analyst said Wednesday that he expects Chevron Corp.'s shares to significantly outperform those of Exxon Mobil Corp. over the next five years because of higher growth and better returns.
THE OPINION: Evan Calio said that U.S. integrated oil companies have been consolidating or dissolving over the past 16 years, with only Chevron and Exxon left.
Calio said that while the consolidation has ended, Chevron's combination of higher production growth and improving returns over the next five years will allow its shares to outperform those of Exxon by about 55 percent, representing about $125 billion in value.
The analyst expects Chevron's production to increase between 4 and 5 percent through 2017, while Exxon's will probably rise 1 to 2 percent.
Calio cut his rating for Exxon to "Underweight" and backed his "Overweight" rating for Chevron.
THE SHARES: In afternoon trading amid a broad market rally, Chevron rose 89 cents to $119.53 and Exxon rose 28 cents to $89.05.