By Sam Boughedda
UBS assumed coverage of ExxonMobil (NYSE:XOM) on Wednesday, upgrading it to Buy from Neutral and raising the price target to $144 from $125.
UBS analysts described XOM as the "leader of the pack," adding that the firm sees "the Integrated Oils as best positioned to outperform this upcycle, driven by improved balance sheets and significantly more capital efficient asset bases that generate higher FCF with greater visibility to support consistent shareholder returns."
"For XOM, our positive outlook is driven by high margin upstream volume growth 2%/3% above 2024/25 Consensus that are paired annual Downstream/Chemicals capacity additions, while maintaining capex at $20-25Bn/yr," the analysts wrote.
UBS forecasts that XOM's balance sheet goes into a net cash position by mid-2024, which they feel will provide flexibility to push shareholder returns above the $17.5 billion per year buyback pace while providing downside support.
Despite the upgrade, ExxonMobil shares are down around 1% premarket.