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Vivek Kumar

Exxon Mobil Corporation, an American multinational oil and gas entity headquartered in Texas, said that it has incurred an unprecedented second straight quarterly loss from the fall in oil and natural gas prices after coronavirus lockdown restrictions dampened energy demand worldwide, the company said in its regulatory filing.

The oil and natural gas explorer took a hit as those commodities plunged this year. The unit’s operating profit dropped by between $2.5 billion and $3.1 billion, the company said. Refining business witnessed a contraction by nearly $1 billion. According to Cowen & Company, Exxon will register a per-share loss of 69 cents at the midpoint, worse than Bloomberg’s survey forecast of 55 cents.

Exxon faces a loss of $2.3 billion in the second quarter, or 57 cents per share, according to estimates from Refinitiv IBES, reported by Reuters. Second-quarter earnings result is expected to be published on July 31.

Crude oil has fallen over 30% since the start of the year as the coronavirus pandemic shattered global demand and a glut forced lower production in oil-producing countries.

Exxon outlook and price target

Thirteen analysts forecast the average price in 12 months at $49.80 with a high of $80.00 and a low of $34.00. The average price target represents a 12.98% increase from the last price of $44.08, according to Tipranks. From those 13, one analyst rated ‘Buy’, ten analysts rated ‘Hold’ and two rated ‘Sell’.

BofA global research lowered price objective to $77 from $80, UBS raised target price to $50 from $48, Goldman Sachs raised price target to $44 from $41 and JP Morgan raised target price to $51 from $44. Morgan Stanley target price is $44 with a high of $85 under a bull scenario and $23 under the worst-case scenario.


Analyst comment

“Attractive investment opportunities, but above average execution risk. XOM’s $30-$35 B in annual capex through 2025 supports growth projects in Guyana, Brazil, Permian, PNG LNG, and Mozambique and expands refining & chemicals capacity. Execution risk remains an overhang for now, though could drive long-term upside if successful,” noted Devin McDermott, equity analyst at Morgan Stanley.

“Growth targets appear hard to achieve.  XOM sees the potential to double earnings by 2025, though that assumes downstream & chemicals margins recover off the lows experienced in 2019 (and so far in 2020) to the 5-year average. Higher spending and more exposure than peers to current downstream & chemicals margin weakness leads to lower FCF yield,” he added.

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