UPDATE: Deutsche Bank Sees 14% Upside in Chevron

Along with a series of other companies, Deutsche Bank initiated Chevron CVX with a buy rating and $142 price target (14.2 percent upside).

Analyst Ryan Todd starts by commenting that Chevron has been spending too much money on heavy capital expenditure projects and that free cash flow has been falling. “However, its strength remains its steady plan and clear identity: organically driven, deep, oil-levered, high-margin project queue, now complimented by possibly the highest quality US onshore position in the industry.”

Todd also likes Chevron’s offshore business. The business is just eight percent of sales, but 20 percent of growth. This, “reduces volatility/lumpiness of growth, and offers a source of potential upside as resource quality and activity levels improve.”

The $142 price target is based on a 6.6 times forward EV/DACF.