BofA Securities analyst Doug Leggate reiterates a Buy rating, a price target of $140 on Exxon Mobil Corp XOM, and revised estimates following its fourth-quarter results.
Last week, the company reported an adjusted net profit of $9.96 billion, or $2.48 per share, down from $14.04 billion, or $3.40 per share, a year earlier, beating the consensus of $2.21.
Revenue and other income slipped to $84.34 billion from $95.43 billion and missed Wall Street’s estimate of $85.23 billion.
The analyst expects the project contribution to free cash flow to accelerate in 2024, led by Guyana, which should position the company to beat its target to double cash flow by 2027 vs a 2019 baseline.
Leggate assumes the company to add the equivalent of ~80% of its ‘pro-forma dividend burden,’ including the presumed closure of its pending Permian acquisition.
Notably, the analyst expects the combination of organic growth and timing of strategic acquisitions to pull Exxon’s post-dividend breakeven towards $40 Brent. The analyst expects the company to achieve this by 2024, leading to the balance of the period through 2027 for a similar reset in the dividend growth rate.
Also, with the share buybacks expected to be reset post close to an annual rate of $20 billion, the company’s per share growth can potentially be best in class amongst peers, writes the analyst.
The analyst revised EPS estimates to $8.34 (from $8.15) vs. $9.01 estimate for FY24 and $9.86 (from $9.93) vs. $9.54 consensus for FY25 while providing an estimate of $10.84 (vs. street view of $10.19) for FY26.
Price Action: XOM shares are trading higher by 0.29% at $102.27 on the last check Monday.
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