Exxon Mobil Is A Buy With Signs Of Strong Third-Quarter Earnings, Says Bank Of America

Exxon Mobil Corp XOM shares are trading 4.6% higher to $99.63 on Wednesday following a new 8-K filing that indicates strong third-quarter earnings that will likely be above consensus estimates and puts management on track to achieve its cash target of $20-$30 billion within the third quarter, according to Bank of America’s Securities division.

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What happened: Analysts at BofA Securities division reiterated a Buy Rating and raised Exxon’s third quarter earning per share (EPS) estimate from $3.46 to $3.88 primarily due to strong gas realizations and the more than offset declines in consecutive oil prices caused by the lagging effects of increased liquefied natural gas contract prices.

“By our estimates, XOM’s indicators suggest 3Q22 upstream earnings will surpass record 2Q22 earnings with an implied mid-point of $11.8bn vs $11.1bn in 2Q22,” Bank of America said in a note to investors Wednesday. “While refining is lower sequentially, 3Q22 still looks like XOM’s second best quarter ever, while combined Chemicals/Specialty Products holds up much better than expected, with higher specialty pricing offsetting polymer weakness.”

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What’s next: According to analysts at BofA Securities, Exxon is now poised to increase its dividend meaningfully for the first time in three years and maybe speed up its buyback program, which has already increased by three times to $30 billion through the end of 2023.

The firm recognizes Exxon as its top pick, saying “our Buy Rating recognizes XOM as value, growth and income at commodity prices well below current levels.”

Exxon Mobil is due to report third-quarter earnings on Oct. 28, 2022.

Price Action: Shares of XOM were up 4.26% on Wednesday at $99.31.