UBS: Exxon And Chevron Are Trading At Historically High Valuations
Overall, UBS remained neutral on both names.
Exxon's recently-revealed capex budget for 2015 is about $34 billion, in line with expectations and longer-term guidance. The 2015 capex number represents about a 12 percent year-over-year (Y/Y) decline for the company.
On the production front, Exxon disclosed a target of 4.1 MMBoed for 2015, in line with previous guidance and a 2.2 percent increase over 2014 production levels. The only change to the company's production outlook was a slight adjustment in the mix, favoring more liquids over gas.
Analysts point out that Exxon's stock is currently trading at a premium to its historical valuation. Its relative price to earnings ratio (PE) of 1.0x versus the overall S&P is well above its historical 0.8x average.
Analysts have a price target of $92 on Exxon's stock.
Chevron's analysts day is coming up on March 10. Analysts predict that the company will maintain its current guidance, including a 16 percent Y/Y reduction in capex to about $31 billion.
UBS is expecting Y/Y production growth of 0 to 3 percent and a long-term volume target of 3.1 MMBoed for Chevron.
Chevron's stock is also currently trading at a premium to its historical valuation relative to the S&P. Chevron's relative PE of 0.93x is well above its historical average of 0.66x.
Analysts have a price target of $108 on Chevron's stock.
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