- RBC Capital launches coverage of energy giants Exxon Mobil (XOM), which the firm says should trade at a higher multiple to the sector, and Chevron (CVX), which boasts high growth but capex and free cash risks.
- XOM, initiated with an Outperform rating and $105 target price, stands out as the prime source of free cash flow in the sector, which the firm sees as a key issue for investors; XOM "has a sustained record and corporate reputation for a tenacious focus on seeking competitive advantage and superior returns."
- CVX, started at Sector Perform and a $120 target, has above-average production growth, cash margins, and a healthy balance sheet, but its intense capital investment to drive growth leaves it with the largest negative free cash flows in the firm's coverage and moves it to more average gearing and returns.
RBC initiates Exxon and Chevron, cites free cash flow distinction
Dec 13 2013, 17:25 ET