Oppenheimer On Exxon: 'We Don't See Any Near-Term Catalyst That Would Lift Performance Above The S&P 500'

• Exxon Mobil Corporation XOM shares are down 21 percent year-to-date, after touching a high of $93.37 on February 13.
• Oppenheimer analyst Fadel Gheit maintained a Perform rating on ExxonMobil.
• Low gas prices have hampered the stock and only a major acquisition can act as a catalyst for an upward movement, Gheit believes.

ExxonMobil reported its 2Q15 adjusted earnings at $3,960 million, or $0.94 per share, down 43 percent year-over-year and 12 percent sequentially, despite higher realizations. The company’s latest quarter earnings were impacted by higher Canadian taxes.

Gheit said that 48 percent of the company’s latest quarter earnings came from upstream, 31 percent from downstream operations and the remaining 21 percent from chemicals. He added that the company’s North America upstream losses are expected to continue in 3Q15 in the US and beyond 2016 in Canada.

Oppenheimer noted, “XOM has been a core holding for investors seeking a defensive investment with dividend growth. Low volatility, financial strength, capital discipline, operating efficiency and strong management are its most attractive characteristics, in our view. The XTO acquisition made XOM the largest gas producer in the US, but low gas prices have hampered the stock.”

ExxonMobil’s share repurchase program is not “safe on current spending levels,” Gheit said, citing the company’s size, growing production and challenging reserves position. “Barring a major acquisition, we don’t see any near-term catalyst that would lift performance above the S&P 500's,” the report added.