Pioneer Natural Resources Downgraded Amid Exxon Mobil Acquisition: Here's Why

Mizuho Securities analyst Nitin Kumar downgraded Pioneer Natural Resources Co PXD to Neutral from Buy and maintained the price target at $301.

The analyst downgraded the stock, reflecting the pending acquisition by Exxon Mobil Corp XOM.

Kumar revised estimates to reflect the company's updated FY23 volume and capex guidance.

The company reported Q3 FY23 adj. EPS of $5.83, beating the consensus of $5.55, and revenue of $3.46 billion, missing the consensus of $3.89 billion.

PXD raised the midpoints of FY23 oil and total production guidance to 370-373 MBOPD (from earlier outlook of 364-374 MBOPD) and 708-713 MBOEPD (from 697-717 MBOEPD prior), respectively. 

The analyst sees any further missteps in PXD's strategy of higher return projects in 2023 and moves towards more co-development of the zone as a matter of concern.

Also, underperformance on recoveries per lateral foot on new 15k'+ laterals could remove a key potential upside catalyst for the company, says the analyst. 

The analyst sees Q4 FY23 EBITDAX / CFPS estimates of $2.946 billion (vs. consensus of $2.737 billion) and $10.47 (vs. street view of $10.16), respectively.

Price Action: PXD shares traded lower by 0.70% at $235.24 on the last check Wednesday.

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