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Bank Of America Maintains Exxon Mobil At Buy, Says 'Outlook Intact'

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In a report published Wednesday, Bank of America analyst Doug Leggate commented on Exxon Mobil Corporation's (NYSE: XOM) Analyst Day, noting that its 2015 strategy update has "minimal new news" and that its outlook is "intact."

Leggate argued that the company's continued strategy of shifting towards liquids from natural gas will drive margin expansion which is the "hallmark" view on Exxon's differentiated investment case versus other "supermajor" peers.

"While we acknowledge XOM as relatively defensive and hence lower beta in the event of an oil price recovery, it lacks the cash burn of several peers even in a recovery to a $70/$80 strip scenario," Leggate wrote. "Thus in the context of glacial incremental changes that characterize companies of this scale, we believe XOM remains as best placed to ride out the current downturn."

Leggate expanded by stating that even in a $60 Brent environment, Exxon will see only "modest" cash burn of $16 billion between 2015 and 2017 – including buybacks of $4 billion per year. On the other hand, the analyst calculated that cash burn from Chevron Corporation (NYSE: CVX) will be around $33 billion before disposals in the same period.

Shares of Exxon remain Buy rated with a $101 price target.

Latest Ratings for XOM

DateFirmActionFromTo
Apr 2021Raymond JamesUpgradesUnderperformMarket Perform
Apr 2021JefferiesUpgradesUnderperformHold
Mar 2021Morgan StanleyMaintainsOverweight

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Posted-In: Bank of America Brent Doug Leggate Oil SupermajorAnalyst Color Analyst Ratings

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