Goldman Sachs analysts downgraded shares of ExxonMobil (NYSE:XOM) to Neutral from Buy after “sharp multi-year outperformance.” The new price target is $125 per share.
Exxon stock is up about 37% over the last 12 months as higher oil prices boosted the company’s profits to record levels. The stock is down 1.5% in premarket Monday on the Goldman news.
The analysts note that Exxon stock delivered 175% returns since Goldman upgraded it in late 2020. They said the “structural re-rate” was driven by lower costs, leadership changes, investments in attractive long-term projects, and greater investor confidence in the sustainability of the dividend and ongoing share repurchases.
“The valuation of ExxonMobil now appears to better reflect the structural turnaround in the business, with shares trading at a 7% FCF yield on 2024 estimates at $85/b Brent,” the analysts said in a client note.
“While we recognize that we no longer have a Buy rating on the two largest US oils, Exxon and Chevron (NYSE:CVX), we do believe there is absolute value in a number of equities in the Energy complex and still maintain the long-term positive view on oil prices.”