Exxon Mobil shares rose nearly 2% in pre-market trading on Tuesday after the Irving Texas-based oil company reported the largest profit in seven years, thanks to higher energy prices and a waning pandemic.
The U.S. largest publicly traded oil company reported fourth-quarter 2021 earnings of $8.9 billion, or $2.08 per share assuming dilution, resulting in full-year earnings of $23 billion, or $5.39 per share assuming dilution. That was well above the market expectations of $1.73 per share.
This multi-fold rise in the fourth-quarter earnings was largely driven by higher energy prices. Supply shortages and political tensions in Eastern Europe and the Middle East pushed oil prices up on Monday, ending January at their highest level in a year.
On Friday, the benchmark, Brent oil, reached their highest levels in over a year, reaching $91.70 and $88.84, respectively, marking their sixth straight weekly gain. This was their best performance since February 2021, up 17%, Reuters reported.
Exxon Mobil’s board of directors approved the company’s corporate plan for 2022, with capital spending anticipated to be in the range of $21 billion to $24 billion. Beginning in the first quarter of 2022, the company announced share repurchases associated with the previously announced buyback program of up to $10 billion over the next 12 to 24 months.
Following this, Exxon Mobil stock rose over 1.55% to $77.1 in pre-market trading on Tuesday. The stock rose over 24% so far this year after surging nearly 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, 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 $77.77 with a high forecast of $100.00 and a low forecast of $62.00.
The average price target represents a 2.38% change from the last price of $75.96. 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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This article was originally posted on FX Empire
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