Exxon Mobil (XOM) – Get the report Wednesday was overweighted neutral by an analyst at JP Morgan, who said he was bullish on the energy giant for the first time in seven years of hedging integrated oils, since the sector peaked in 2014.
Shares of integrated energy giant from Irving, Texas, in the last check, rose 1.3% to $ 48.49.
Analyst Phil Gresh, who raised his price target to $ 56 per share from $ 50, said Exxon Mobil’s expectations were “significantly lower,” that its execution “may finally take a turn.” 2021 consensus estimates are too low and above 7% dividend yield is “safer,” according to the Fly.
Gresh said in a note to investors that Exxon’s capital discipline was improving after years of unnecessary spending. He sees a “potential case on the rise” where its dividend hedge break-even point approaches $ 45 a barrel of Brent and its free cash flow yield approaches 11.5% at $ 60 oil.
“Improved transparency, cost reduction actions and increased investor pressure could all serve to push Exxon to achieve more consistent results,” said Gresh.
In August, Exxon Mobil was pulled from the Dow Jones Industrial Average as the company, and the industry as a whole, struggled with depressed demand resulting from the coronavirus pandemic.
World crude prices have now more than doubled from lows of a year ago.
Morgan Stanley analyst Devin McDermott overweighted Exxon Mobil at equal weight on Monday with a price target of $ 57, down from $ 49.
“Proactive cost and [capital-spending] the reductions associated with rising commodity prices and downstream margins and on chemicals are supporting an inordinate rate of change in free cash flow and dividend coverage, ”McDermott said, according to Bloomberg.
After preferring Chevron (CVX) – Get the report In recent years, McDermott said, he’s changed his mind and prefers Exxon for 2021. He said Exxon shares have underperformed Chevron shares by about 50% in the past five years.