TD Cowen upgraded shares of ExxonMobil (NYSE:XOM) to Outperform from Market Perform and downgraded Chevron (NYSE:CVX) to Market Perform in separate notes Tuesday.
The investment bank kept a $115 price target on XOM, telling investors that they see a more compelling upside as the stock has declined with an unchanged valuation.
"We continue to forecast CFO growth below XOM's guidance, though our forecast has increased through 2023 with incremental company disclosures," wrote analysts. "XOM's peer-low oil price needed to organically fund the dividend could become a larger investor focus as commodity prices could normalize after a couple very strong years."
Meanwhile, the CVX price target was cut to $150 from $170 per share. Analysts said the company's largest drivers of CFO growth – Permian and TCO – could continue to be discounted by the market due to execution concerns.
In addition, the HES deal may not result in annual net cash inflows until 2027, TD Cowen added. "As a result, CVX needs a higher oil price to cover its dividend and may not sustain its buyback pace beyond '25, while oil risk shifts to downside bias," explained analysts.