Investing.com -- Bank of America raised its price target on Chevron Corp to $185 from $180, saying the oil major's acquisition of Hess has deepened its upstream tilt and set the stage for a sharp free cash flow jump over the next 18 months.

The brokerage reiterated its Buy rating on Chevron and maintained a Neutral on Exxon Mobil, while lifting Exxon's target to $120 from $118.

Chevron has historically generated more earnings from upstream production than Exxon. The brokerage said Hess raises Chevron's 2026 upstream earnings share to 86% from 83%, compared with Exxon's 67%.

"Since chems is below midcycle and oil/refining are near midcycle, most investors would favor XOM at a similar valuation, particularly because consensus is for crude price to fall," analysts wrote.

"This, however, ignores the fact that CVX trades at a material discount thanks to its underappreciated FCF inflection story."

Both companies now have broadly similar upstream portfolios, with about 40% from shale, 25% conventional, and around 12-15% each from deepwater and LNG.

Exxon's Permian performance on operated wells has been stronger, but Chevron's large non-operated positions could deliver comparable results, BofA said.

The brokerage expects Chevron's free cash flow per share to climb from $7.6 in 2024 to $17.4 by late 2027 as long-dated projects start up and capital spending falls. Exxon's free cash flow is seen rising more gradually, from $8.2 in 2024 to $10.6 by 2027, but then continuing to grow through 2030.

BofA said the valuation gap between the two should narrow but may not close, as Exxon's chemical and Permian integration merits a premium.

It sees Exxon likely to pursue more Permian assets, while Chevron could move to increase downstream exposure through its CPChem joint venture.