On Thursday, TD Cowen maintained a Buy rating on ExxonMobil (NYSE: NYSE:XOM) and increased the stock's price target to $128.00, up from the previous $120.00. The firm revised its earnings per share (EPS) estimate for the first quarter of 2024 slightly upward from $2.20 to $2.23, compared to a consensus estimate of $2.19. ExxonMobil had guided its EPS to $2.20, with a projected range between $1.81 and $2.61. Historical data shows that since the first quarter of 2021, ExxonMobil has typically surpassed the midpoint of its guidance by approximately $0.10 per share, or 6%.
In the upstream segment, TD Cowen's analysts estimate earnings at $6.2 billion, which is a slight increase from the prior estimate and consensus of $6.1 billion, and also above the guidance figure. This adjustment takes into account a smaller than anticipated decline in gas trading benefits from the previous quarter and includes the elimination of a $0.2 billion tax headwind that was not factored into the official guidance. However, the analysts also accounted for a reduction in production by 20,000 barrels of oil equivalent per day (kboed) due to the impact of winter storms, which was not included in ExxonMobil's guidance, reducing earnings by $0.1 billion.
For the downstream sector, the estimate stands at $2.4 billion, slightly below the prior and guided figure of $2.5 billion, and significantly below the consensus estimate of $3.1 billion. The analysts noted that while industry margins increased more than forecasted, this was offset by higher maintenance costs, which were likely due to the same higher industry margins as ExxonMobil was unable to fully capitalize on them. The company indicated that the first quarter of 2024 would be its most active maintenance quarter of the year. Additionally, the analysts incorporated a $0.3 billion one-time benefit from the fourth quarter of 2023 that is not expected to recur, balanced by a $0.2 billion reduction in seasonal operating expenses.
The firm also highlighted a change in ExxonMobil's financial reporting, where the "Unsettled Derivatives" line item has been renamed to "timing effects." This new category will include unsettled derivatives as well as timing differences between derivative settlements and their offsetting physical commodity realizations, while settled trades will continue to be reflected in the reported industry margin line-item.
InvestingPro Insights
As ExxonMobil (NYSE: XOM) garners a positive outlook from analysts at TD Cowen, real-time data from InvestingPro further enriches the investment landscape for this oil and gas giant. With a robust market capitalization of $474.63 billion and a Price to Earnings (P/E) ratio standing at an attractive 13.46, ExxonMobil showcases a strong financial foundation. The company's commitment to shareholder returns is evident in its history of raising dividends, now for a remarkable 41 consecutive years, underscoring its financial stability and investor-friendly approach.
InvestingPro Tips highlight that ExxonMobil has not only maintained dividend payments for an impressive 54 consecutive years, but also that analysts have recently revised their earnings upwards for the upcoming period, indicating potential optimism in its financial performance. Additionally, the company's stock is currently trading near its 52-week high, with a price percentage of 98.84% of that peak, reflecting strong market confidence.
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