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4 Reasons Why JPMorgan Upgraded ExxonMobil

Priya Nigam
·1 min read

Exxon Mobil Corporation’s (NYSE: XOM) execution seems to have improved, JPMorgan said in a Wednesday upgrade.

The 2021 consensus expectations are low, the company’s dividend yield is more secure and the stock valuation is reasonable, in the sell-side firm's view. 

The ExxonMobil Analyst: Phil Gresh upgraded ExxonMobil from Neutral to Overweight and raised the price target from $50 to $56.

The ExxonMobil Thesis: The company’s capital discipline is improving, as it has imposed a capital expenditure restriction of $20-$25 billion, which should preserve its dividend and balance sheet, Gresh said in the upgrade note.

The stock has “a potential upside case where XOM’s dividend coverage breakeven approaches $45/bbl Brent and its FCF yield approaches 11.5% at $60/bbl Brent longer term, assuming modestly higher production, slightly higher normalized Downstream/Chemicals margins and capex discipline,” the analyst said. 

ExxonMobil has a substantial asset base “that ought to be dramatically whittled down as the macro improves,” he said.

“This would have the dual benefit of reducing debt and accelerating XOM’s organic ROIC improvement from higher margin investments like Guyana.”  

XOM Price Action: Shares of ExxonMobil were trading 0.7% higher at $48.22 at last check. 

Latest Ratings for XOM

Date

Firm

Action

From

To

Jan 2021

JP Morgan

Upgrades

Neutral

Overweight

Jan 2021

Morgan Stanley

Upgrades

Equal-Weight

Overweight

Dec 2020

Goldman Sachs

Upgrades

Neutral

Buy

View More Analyst Ratings for XOM
View the Latest Analyst Ratings

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