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Chevron Lags Exxon After Goldman Sachs Downgrade, Price Target Cut

Goldman Sachs analyst Neil Mehta lowered his rating and price target on Chevron, noting he sees more near-term potential in rival Exxon Mobil.

Chevron Corp.  (CVX) - Get Chevron Corporation Report shares lagged their rivals Tuesday after analysts at Goldman Sachs cut their rating and price target on the second-largest U.S. oil company. 

Goldman Sachs analyst Neil Mehta snipped $4 from his Chevron price target, which now sits at $117 per share, and lowered his rating on the stock to 'neutral' from 'buy', citing the group's current valuation relative to its peer group, adding he sees more near-term upside from rival Exxon Mobil  (XOM) - Get Exxon Mobil Corporation Report.

Chevron shares were marked 0.25% higher in early trading Tuesday to change hands at $104.75 each. The group will post its first quarter earnings on April 30. Exxon shares, meanwhile, were marked 1.25% higher at $57.20 each.

In the final three months of 2020, which CEO Mike Wirth called "a year like no other", Chevron posted an annual loss of $5.5 billion, its first since 2016, amid rising costs linked to its acquisition of Noble Energy and plunging revenues from coronavirus-triggered shutdowns of businesses, airlines and factories around the world.

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The group's efforts now are focused on expanding its oil and gas production over the next four years, while keeping a stern eye on costs and vowing to reduce its carbon emissions.

Chevron said earlier this year that it would cut is 2021 capital spending forecast to around $14 billion, including around $300 million in costs linked to the lower carbon transition, as it looks to shift investment away from traditional crude oil markets and into lower carbon alternatives.

Wirth told investors last month that it can double its return on capital employed by 2025, to more than 10%, and forecast free cash flow in the region of $25 billion through that end-year target. Chevron also said it will devote 2% of its spending on projects that target lowering its overall carbon footprint.