Morgan Stanley Expects Lower Street Estimates for Chevron

In a report published Thursday, Morgan Stanley analyst Evan Calio reiterated an Overweight rating and $135.00 price target on Chevron CVX. In the report, Morgan Stanley noted, “Following today's interim update, we lower 1Q14 EPS to $2.30 ($2.60 clean) from $2.68 vs. the Street at $2.75. Drivers include: (1) lower US volumes vs. our expectations for a modest increase; (2) lower int'l production volumes due to maintenance activity in Kazakhstan and Canada; and (3) lower international refining crude throughput due to higher maintenance activity. "CVX also expects several special items including a: (1) $100MM FX loss in 1Q14 vs. $202MM gain in 4Q13, a $0.05/sh loss excluded in our clean EPS, yet accounted for differently in Street estimates; and (2) non-cash impairment charges of ~$450MM ($0.23/shr) associated with upstream assets. Despite holding a leading acreage position in the Permian (~2MM acres), CVX's US crude volumes are down 5% y/y. Expect modest weakness, yet recent underperformance reflects lower expectations.” Chevron closed on Wednesday at $119.10.