Investing.com — William Blair launched coverage of the three largest U.S. oil companies with a split verdict, rating Chevron “outperform” with 43% upside while calling Exxon Mobil and ConocoPhillips “market perform,” arguing Exxon’s premium multiple already reflects its Guyana and Permian growth.
The brokerage set fair values of $326 a share for Chevron, $205 for Exxon and $167 for ConocoPhillips.
Chevron trades at 5.8 times its 2027 earnings estimate and a 10% free cash flow yield, against group averages of 3.9 times and 13%.
Blair said its global scale and cost structure warrant a premium and that it could trade as high as 7.5 times and a 6% yield. The broker forecasts Chevron’s free cash flow at $43.5 billion in 2026, $41.1 billion in 2027 and $35.1 billion in 2028.
Exxon trades at 7.4 times and an 8% yield, versus group averages of 4.5 times and 12%. Guyana output is about 900,000 to 920,000 barrels a day, and Permian production has reached roughly 1.7 million barrels of oil equivalent a day, but Blair forecasts relatively flat production until at least mid-2027.
Exxon’s free cash flow is forecast to fall from $61.1 billion in 2026 to $53.7 billion in 2027 and $50.1 billion in 2028, largely due to lower commodity prices and various margins. Benchmark crude prices WTI and Brent are forecast at $80 or more a barrel until at least the third quarter of 2027.
ConocoPhillips trades at 5.7 times and a 7% yield, versus group averages of 6.3 times and 8%.
Blair forecasts its free cash flow at $14.5 billion in 2026, $12.9 billion in 2027 and $12.1 billion in 2028, then $13.3 billion in 2029 versus $7.3 billion last year, as cost cuts and portfolio growth drive the rise.
The company targets returning 45% of cash from operations to shareholders. Blair said ConocoPhillips, reported to be weighing a sale of its Norway business and U.K. Teesside asset, would sell only at the right price, which could top $7 billion.
Blair’s “hot takes” are that ConocoPhillips is sold to a major oil and gas company, Exxon could buy Occidental Petroleum and Chevron exchanges Bakken assets for low-cost international recovery assets.
Risks include changes to commodity prices or forecasts, service and labor costs, and the ability to replace development inventory at reasonable prices.
Original Article
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Source: finance.yahoo.com — article syndicated from the publisher’s feed; all rights remain with the original publisher.
