On Thursday, UBS made an adjustment to ExxonMobil (NYSE:XOM) shares target, bringing it down to $153 from the previous $154, while reaffirming a Buy rating on the stock. The revision follows ExxonMobil's second-quarter earnings considerations, which prompted UBS to modify its projections for the second quarter of 2024 and beyond.
The reduction in the price target by $1 per share to $153 is attributed to two primary factors. First, there was a dip in Energy Product margins, which mainly affected the second quarter's performance.
Additionally, a rise in depreciation, depletion, and amortization (DD&A) expenses due to the accounting for the acquisition of Pioneer Natural Resources (NYSE:PXD) also contributed to the need for revision.
Despite these downward revisions, UBS noted an offsetting factor in the form of higher cash flow per share (CFPS), which arose as a consequence of the increased DD&A. This higher cash flow serves as a counterbalance to the lower earnings per share (EPS) projections.
The firm maintains a positive long-term outlook for ExxonMobil. UBS highlighted that the next significant event to watch for is ExxonMobil's Upstream Spotlight & Corporate Outlook, scheduled for December. In the meantime, updates on the integration of Pioneer Natural Resources and efforts to reduce costs are anticipated during the company's second-quarter earnings call.
In other recent news, International Battery Metals (IBAT) has made significant strides in the lithium sector with its novel direct lithium extraction (DLE) technology. The company's annual output rate is approaching 5,000 metric tons, and analysts predict that DLE technology could become a $10 billion industry within a decade. The technology, which has been endorsed by US Magnesium, is portable and offers a more environmentally friendly alternative to traditional lithium extraction methods.
Exxon Mobil (NYSE:XOM), on the other hand, has been the subject of several recent developments. Mizuho has maintained a neutral rating for the company, adjusting its second-quarter 2024 earnings per share estimate to $2.01, reflecting current market conditions.
Exxon Mobil anticipates a boost in its second-quarter upstream earnings due to changes in oil prices. The company also disclosed its second-quarter earnings considerations in a recent filing with the Securities and Exchange Commission.
In other company news, Goldman Sachs (NYSE:GS) reported that hedge funds have been rapidly purchasing commodity-sensitive stocks, including Exxon Mobil. The U.S. Senate Budget Committee is investigating Exxon Mobil and other major oil companies for potential collusion with OPEC. Finally, Exxon Mobil is nearing a supply deal with electric vehicle battery developer SK On for up to 100,000 metric tons of domestically sourced lithium.
InvestingPro Insights
Following the recent UBS price target adjustment for ExxonMobil, a glance at the real-time data from InvestingPro provides additional context for investors. The company boasts a robust market capitalization of $441.23 billion, reflecting its considerable presence in the industry. With a P/E ratio of 13.69, which adjusts to 12.67 for the last twelve months as of Q1 2024, ExxonMobil trades at a valuation that may appeal to value-oriented investors. The dividend yield stands at 3.4%, which is particularly noteworthy considering ExxonMobil has raised its dividend for 41 consecutive years, demonstrating a strong commitment to shareholder returns.
One of the InvestingPro Tips highlights that ExxonMobil has maintained dividend payments for 54 consecutive years, reinforcing its reputation as a reliable income stock. Additionally, the company operates with a moderate level of debt and analysts predict profitability for the year, which may bolster investor confidence in its financial health. For those seeking further insights and analysis, InvestingPro offers additional tips on ExxonMobil, which can be accessed with a subscription. Interested readers can use the coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, unlocking the full suite of benefits and investment guidance that InvestingPro provides. With 9 additional tips available on the platform, investors can gain a more comprehensive understanding of ExxonMobil's investment potential.
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