Chevron's (CVX) acquisition of Hess in July strengthens the oil and gas company's business, growth and portfolio duration, analysts at Morgan Stanley said in a note to clients Monday.

The deal is expected to be 3.5% accretive to 2026 free cash flow per share, boosting the 2025-2030 cash flow compound annual growth rate from 3% to 5% and free cash flow from 6% to 8%, said analysts.

Chevron's acquisition of Hess, cost-cutting plans and its Tengizchevroil joint venture, which operates the Tengiz oil field in Kazakhstan, should help reduce the gap in stock growth between Chevron and Exxon Mobil (XOM) for the next two to three years, analysts added.

"Exposure to rising production in Guyana will play an important role in addressing [the company's organic growth potential post 2026], extending and enhancing the company's growth outlook for the years ahead," the analysts also wrote.

Morgan Stanley resumed coverage of Chevron at overweight rating with a $174 price target.

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