Exxon Mobil Down On Preview Of Weaker Q3, But Sell-Side Says Warning 'Relatively Benign'

An Exxon Mobil Corporation XOM securities filing that previews disappointing profits in its upcoming third-quarter report thanks to lower oil and gas prices pushed the stock down on Wednesday.

ExxonMobil’s 8-K filing gave a preliminary hint about third-quarter results, and said the decline in commodity prices could hurt results when it reports Nov. 1.

Sell-side analysts were unmoved to change their stances on the stock, though, with at least one seeking to reassure investors that the commodity price issues that will affect the print don’t reflect major underlying issues.

The Analysts

UBS analyst Jon Rigby kept a Neutral rating and $73 target price on the stock.

Mizuho’s Paul Sankey reiterated a Neutral rating and $79 target price.

Bank of America analyst Doug Leggate reiterated a Buy rating and $100 price target.

The Theses

Analysts did cut estimates for the third quarter, with Sankey dropping his earnings estimate from $1.04 to 65 cents.

An earnings positive reflecting recovery from maintenance downtime will be offset by the lower oil prices, Sankey said, leaving EPS in line with the disappointing second-quarter report. Chemical margins also remain weak, he wrote in a note.

“The implied lower results versus consensus suggest that XOM is still lagging market expectations in restoring earnings/cashflows,” added Rigby.

Leggate also adjusted his estimate downward, from 87 cents to 69 cents, but noted some of that is due to a change to mark-to-market accounting.

Relatively Benign

Leggate also sought to downplay the overall effect of the disclosure, however.

“On balance what amounts to a partial preview of XOM's 3Q19 earnings looks relatively benign and largely a consequence of commodity changes with no material operating issues to change the go forward investment case,” Leggate wrote in a note.

Price Action

Investors were reacting negatively on Wednesday, pushing the stock down 2.35% to $67.30.

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Photo credit: Ildar Sagdejev, Wikimedia

Posted In: Bank of AmericaDoug LeggateJon RigbyMizuho Securitiesoil and gas stocksoil pricesPaul SankeyUBSAnalyst ColorNewsGuidanceReiterationTop StoriesAnalyst Ratings