Exxon Mobil Stock Is Well Worth Watching Ahead of Q4 Earnings

Exxon Mobil will see its earnings rise by multi-fold in the fourth quarter thanks to higher energy prices and a waning pandemic that helped it bounce back after a tough period in 2020.

The Irving Texas-based company is expected to report its fourth-quarter earnings of $1.73 per share, which represents year-over-year growth of over 5,666%, up from $0.03 per share seen in the same period a year ago.

The U.S. largest publicly traded oil company is expected to report a 97.3% increase in revenue to $91.845 billion from $46.54 billion a year ago.

On Dec 30, the Irving Texas-based company 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.

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. Exxon announced late last year announced that a sharply higher operating profit in oil and gas, prompting Credit Suisse, Scotiabank, and JPMorgan to raise their fourth-quarter earnings estimates.

Exxon Mobil stock closed 1.29% higher at $75.13 on Thursday. The stock rose over 20% so far this year after surging about 50% in 2021.

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 and Commodities Strategist at Morgan Stanley.

“Cost cuts defend the dividend. In 2020, Exxon Mobil (XOM) reduced 2022-25 spending plans to $20-25B from $30-35B (recently extended to 2027), improving dividend sustainability while limiting further pull on the balance sheet. Additionally, Exxon Mobil (XOM) is targeting $6B in structural operating cost reductions by 2023 which should put upward pressure on consensus FCF estimates.”

Exxon Mobil Stock Price Forecast

Thirteen analysts who offered stock ratings for Exxon Mobil in the last three months forecast the average price in 12 months of $77.08 with a high forecast of $100.00 and a low forecast of $62.00.

The average price target represents a 2.61% change from the last price of $75.12. Of those 13 analysts, six rated “Buy”, seven rated “Hold” while none rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $95 with a high of $110 under a bull scenario and $48 under the worst-case scenario. The investment bank gave an “Overweight” rating on the integrated oil company’s stock.

Several other analysts have also updated their stock outlook. Piper Sandler raised the target price to $85 from $79. Goldman Sachs lifted the target price to $84 from $71. HSBC increased the target price to $72.5 from $64. Truist Securities upped the target price to $70 from $65.

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

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