- Chevron (CVX -0.9%) is downgraded to Neutral from Underperform with a $133 price target, down a bit from $135, at BofA/Merrill, as lower price oil foreshadows a more difficult cash flow outlook.
- BofA contends that with management now routinely referencing $50B at $110/bbl oil as the outcome of its current growth plan, its base case $100 assumption applied across its coverage universe suggests a more challenging outlook for CVX's free cash flow, given current net cash outflow looks to remain above $50B.
- While planned disposals suggested by management could top ~$10B, BofA says its analysis suggests CVX will build material debt over the next four years, consistent with the ~$12B annual run rate evident over the past year.