Chevron (CVX +0.6%) is upgraded to Outperform from Neutral with a $130 price target at Macquarie, saying OPEC production cuts put a floor on oil prices moving into 2017, which benefits CVX as one of the most oil-levered stocks among the majors.
With most of CVX's operational issues now behind it and a restrained capital budget recently announced for 2017, the firm thinks CVX should be able to generate significant free cash flow in 2017, sufficient to cover its dividend.
Macquarie remains cautious on Underperform-rated Exxon Mobil (XOM +0.1%), which it thinks still looks much too expensive vs. peers, although the free cash flow profile should improve significantly in 2017 due in part to its U.S. onshore production becoming more profitable.
Now read: Exxon Mobil: Why You Should Be Long »
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