Exxon Mobil Upgraded As Shares Draw Close To Year-Lows

Exxon Mobil Corporation XOM continues to underperform its domestic and international peers, and 2017 is no exception with shares down 11 percent year-to-date.

The oil giant is receiving a boost, however, due to an upgrade from UBS, which lifted its rating on Exxon from Sell to Neutral.

The timing of the upgrade certainly has a lot to due with oil prices surging after Hurricane Harvey, which was a major threat to one of the most prolific oil refinery regions in the nation.

“The shares are still on a substantial premium rating but one that is line with historic norms," UBS analyst Jon Rigby said. "We expect oil prices to slowly recover and robust demand to keep downstream margins healthy. In that context it seems less likely to us that shares will fall materially further."

Although UBS managed to lower its near-term oil price view, Rigby still believes the recovery will be above consensus levels in the medium/long term, due to robust demand that is supporting refining margins.

Exxon is known for being most competitive in bottom of the cycle conditions and the lack of a defining transaction in the current cycle is what is weighing on financial performance. The company’s balance sheet continues to be strong however, even by industry standards.

UBS also raised its price target, from $75 to $76.