On Monday, Truist Securities adjusted its outlook on shares of ExxonMobil (NYSE:XOM), reducing the price target to $121 from $124 while maintaining a Hold rating on the stock. The revision reflects updates to the firm's financial model, including changes to the price deck and forecasted figures for the years 2024 through 2026.
The new price target of $121 is based on a combination of two equally weighted valuation methods. The first method applies an enterprise value to EBITDAX (EV/EBITDAX) multiple of 6.0x, which is above the peer average of 4.1x, to Truist's 2025 estimated EBITDAX of $94,328 million. This estimate is notably higher than the consensus EBITDAX forecast of $82,690 million for the same year.
The second method used by Truist Securities to determine ExxonMobil's price target involves a free cash flow to enterprise value (FCF/EV) yield assumption set at 9.0%. This dual-method approach aims to provide a balanced view of the company's valuation by considering both earnings before interest, taxes, depreciation, amortization, and exploration expenses (EBITDAX) and the yield from free cash flow.
The Hold rating suggests that Truist Securities advises investors to maintain their current position in ExxonMobil shares without suggesting additional buying or selling action at this time. The revised price target indicates a slight decrease in the firm's expectations for the stock's future performance.
Truist Securities' updated stock price target and rating for ExxonMobil come as the firm revises its financial models to account for the latest available data and forecasts, ensuring that their analysis reflects current market conditions and company prospects.
In other recent news, Exxon Mobil Corp (NYSE:XOM) has completed the sale of its oil and gas assets in Malaysia to state-owned energy company Petronas, marking a significant departure from the Malaysian upstream sector. These assets include the Tapis oilfield, which Exxon has operated since 1978. The move aligns with Exxon's strategic shift to focus on oil production in the Americas. The specifics of the transaction have not been disclosed.
Exxon is also challenging Chevron (NYSE:CVX)'s planned $53 billion acquisition of Hess (NYSE:HES), centering on the control of Hess' subsidiary in Guyana. Exxon claims it should have been offered the chance to buy Hess' 30% stake before the acquisition by Chevron. The outcome of this dispute could result in various scenarios, including Exxon potentially bidding for Hess' stake in Guyana.
Lastly, Kevin Hern, representative for Oklahoma's 1st congressional district, has made several investments through dividend reinvestment in various companies, including Exxon Mobil. These transactions are part of Hern's investment strategy, representing a diversification of his portfolio.
InvestingPro Insights
As investors digest the revised outlook from Truist Securities on ExxonMobil, it's worth considering additional metrics and insights from InvestingPro. ExxonMobil has demonstrated a strong commitment to returning value to shareholders, raising its dividend for an impressive 41 consecutive years. Furthermore, the company operates with a moderate level of debt and has maintained dividend payments for 54 consecutive years, showcasing its financial stability and reliability.
Looking at the real-time data, ExxonMobil boasts a market capitalization of $454.16 billion, reflecting its significant presence in the industry. The company's P/E ratio stands at 14.24, which adjusts to 13.14 when looking at the last twelve months as of Q1 2024, indicating a potentially attractive valuation compared to historical earnings. Moreover, investors may find the dividend yield of 3.27% appealing, especially considering the company's track record of dividend growth, which was 4.4% over the last twelve months.
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