ExxonMobil price target lowered to $140 by Wolfe Research on FCF outlook

Investing.com - Wolfe Research lowered its price target on ExxonMobil (NYSE:XOM) to $140.00 from $142.00 on Wednesday, while maintaining an Outperform rating on the stock. According to InvestingPro data, the stock currently trades at a P/E ratio of 15.1x, with analysts’ targets ranging from $95 to $142.

The firm cited ExxonMobil’s positioning for an inflection in organic free cash flow growth as significant non-productive capital converts to free cash flow when projects begin operations, driving a step change in dividend growth capacity. The company has maintained dividend payments for 55 consecutive years, with a current yield of 3.47% and healthy dividend growth of 4.21% over the last twelve months.

Wolfe Research highlighted a $20 billion run rate for share buybacks that, combined with the free cash flow conversion, will continue to differentiate ExxonMobil’s investment case from peers.

The research firm noted that ExxonMobil has already pre-funded significant growth expected to materialize from ten major project starts in 2025, positioning the company for future returns.

Wolfe Research expects ExxonMobil to demonstrate differentiated capacity to reduce its post-dividend break-even point, supporting dividend growth of approximately 6%, which aligns with the firm’s discounted cash flow-based price target of $140 per share at long-term $67.5 Brent oil prices.

In other recent news, ExxonMobil is poised to report second-quarter earnings with projections varying among analysts. UBS anticipates earnings of $1.55 per share, slightly above the Street consensus of $1.53, but Piper Sandler has revised its estimate down to $1.52 per share. Both firms cite declining oil and gas prices as significant contributors to the projected earnings decline. Mizuho (NYSE:MFG), on the other hand, expects earnings per share to reach $1.72, about 11% above consensus estimates, despite the challenges in the Upstream segment. UBS maintains a Buy rating with a $130 price target, while Mizuho holds a Neutral rating with a $124 price target. Piper Sandler has adjusted its price target to $134, based on updated oil price forecasts. Additionally, ExxonMobil, in collaboration with QatarEnergy, discovered a new natural gas reservoir off the coast of Cyprus. This marks the second discovery in the area, following their initial find in 2019. Further assessment of the reservoir is expected in the coming months.

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