Analysts’ ratings for XOM
ExxonMobil (XOM) stock is covered by 20 Wall Street analysts, six (or 30%) of whom have assigned “buy” or “strong buy” ratings to the stock. However, 11 analysts (or 55%), representing the majority, have assigned “hold” ratings to the stock.
The remaining three analysts have assigned “sell” or “strong sell” ratings to the stock. ExxonMobil’s mean target price of $89 per share implies a 9% gain from its current level.
Royal Dutch Shell (RDS.A), Chevron (CVX), and BP (BP) have been rated as “buys” by 88%, 76%, and 40% of analysts, respectively. Other global players Total (TOT), Suncor Energy (SU), Petrobras (PBR), and YPF (YPF) have received “buy” ratings from 67%, 92%, 14%, and 83% of analysts, respectively.
Why analysts hold mixed opinions on ExxonMobil
ExxonMobil has a robust upstream portfolio, which is expected to drive growth for it by 2025. The company’s Downstream segment also has numerous brownfield and greenfield projects expected to come online in a few years. Thus, XOM has a fully integrated supply chain to create optimum value.
Moreover, XOM’s financial position is stronger than its peers’. In the second quarter, the company had a best-in-class debt ratio (total debt-to-total capital). It also had a cash flow surplus in the first half. We’ll discuss XOM’s debt and cash flows in the next couple of articles.
ExxonMobil stock is presumably trading at premium valuations due to its growth plans and robust financials. XOM has a forward PE of 15.2x and a forward EV-to-EBITDA (enterprise value-to-EBITDA) of 7.2x, both above the peer averages. The company’s “hold” and “sell” ratings could be the result of its high valuations.