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Chevron Has 'Significant Strategic Advantage,' MKM Says In Bullish Initiation

Priya Nigam
·2 mins read

Chevron Corporation (NYSE: CVX) is expected to generate free cash flow of around $1.3 billion in 2020 and $10.1 billion in 2021, and its “preserved financial capacity” is a “significant strategic advantage,” according to MKM Partners.

The Chevron Analyst: John Gerdes initiated coverage of Chevron with a Buy rating and $121 price target. 

The Chevron Takeaways: Between 2022 and 2025, the company could generate about 3% compounded annual growth in its cash flow per share and around 12% average annual free cash flow yield, Gerdes said in a Wednesday initiation note. 

“As a consequence of a 65%-70% higher cash operating margin and competitive equity production-normalized capital intensity, Chevron’s full-cycle return of 190%-195% is significantly above the industry median of 125%,” the analyst said. 

Chevron is acquiring Noble Energy, Inc. (NASDAQ: NBL) in an all-stock transaction.

The acquisition, which is expected to close in early October, “provides complementary assets in the Delaware Basin and internationally, while establishing a leasehold in the DJ Basin,” he said. 

MKM expects Chevron to achieve around $300 million in pre-tax annual acquisition synergies, or about $2.7 billion of incremental value.

CVZ Price Action: Shares of Chevron had slipped 0.50% to $71.59 at the time of publication Thursday.

Photo by Buhler013 via Wikimedia

Latest Ratings for CVX

Date

Firm

Action

From

To

Sep 2020

MKM Partners

Initiates Coverage On

Buy

Sep 2020

ScotiaBank

Downgrades

Sector Outperform

Sector Perform

Aug 2020

Morgan Stanley

Maintains

Overweight

View More Analyst Ratings for CVX
View the Latest Analyst Ratings

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