Exxon Signals Quarterly Profit for the Fourth Time in a Row

Exxon Mobil, an American multinational oil and gas entity, in its regulatory filing said that higher oil and gas prices would enable it to achieve annual profitability starting in 2021 with an operating profit increase of up to $1.9 billion.

According to a Reuters report, The U.S. largest publicly traded oil company hinted that oil and gas earnings could decrease by up to $1.2 billion as a result of one-time charges for asset impairments and contractual costs.

In addition, Exxon said lower margins in chemicals could negatively impact earnings by $600 million to $800 million, compared to the $2.14 billion profits in chemicals during the third quarter.

The integrated oil company said the refinery margins could decrease by $200 million, or remain flat, compared to the $1.23 billion profit the previous quarter. Exxon indicated mark-to-market gains of up to $1.1 billion on oil and gas and refinery products.

Exxon Mobil will report Q4 earnings on February 1. Exxon Mobil stock closed 0.59% lower at $60.79 on Thursday. It surged over 47% so far this year.

Analyst Comments

“Improving FCF outlook and dividend sustainability. With a more constructive commodity price outlook, lower capital spending, and additional cash operating cost savings, the dividend is covered in 2021 and averages >100% over the next 5-years on our estimates. Improving dividend sustainability supports yield compression for Exxon Mobil (XOM) relative to CVX,” noted Devin McDermott, equity analyst at Morgan Stanley.

“Cost cuts defend the dividend. Exxon Mobil (XOM) reduced 2022-25 spending plans to $20-25 B from $30-35 B, improving dividend sustainability while limiting further pull on the balance sheet. Additionally, Exxon Mobil is targeting $6 B in structural operating cost reductions which should put upward pressure on consensus FCF estimates.”

Exxon Mobil Stock Price Forecast

Fifteen analysts who offered stock ratings for Exxon Mobil in the last three months forecast the average price in 12 months of $72.33 with a high forecast of $95.00 and a low forecast of $50.00.

The average price target represents an 18.98% change from the last price of $60.79. Of those 15 analysts, six rated “Buy”, six rated “Hold” while three rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $87 with a high of $110 under a bull scenario and $48 under the worst-case scenario. The firm gave an “Overweight” rating on the integrated oil company’s stock.

Several other analysts have updated their stock outlook. Jefferies raised the target price to $62 from $59. JPMorgan lifted the target price to $83 from $81. Barclays upped the price target to $73 from $71.

Technical analysis also suggests it is good to buy as 100-Day Moving Average and 100-200-day MACD Oscillator signals a buying opportunity.

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