Why This Exxon Mobil Analyst Expects Big Oil Stock To Deliver 'Excellent Returns'

While many energy majors have cut back on investments in oil and gas, Exxon Mobil Corp XOM expects the demand for fossil fuels to grow at least in the medium term and has continued to invest in “some of the most attractive oil & gas projects globally,” according to Credit Suisse.

The Exxon Mobil Analyst: Manav Gupta upgraded Exxon Mobil from Neutral to Outperform, while raising the price target from $115 to $125.

The Exxon Mobil Takeaways: The company has a healthier lineup of upstream growth projects than its peers, Gupta said in the upgrade note.

“As production ramps, XOM will see further drop in its all in break-even and see material upside in FCF,” the analyst wrote. “XOM is the 4th largest natural gas producer in US and will also benefit from higher Henry hub gas prices,” he added.

While others have been selling refining assets, Exxon Mobil has been in investing in them and these assets could “make a material positive FCF contribution,” Gupta said.

He expects this differentiated growth strategy to enable Exxon Mobil deliver “excellent returns for its investors.”

XOM Price Action: Shares of Exxon Mobil were trading 6.27% higher at $91.48 Tuesday.