Exxon Mobil's Strong Q2 Results And Production Gains Offset By Economic Concerns: Analysts Cautiously Optimistic

Exxon Mobil Corporation XOM shares are trading lower today. The sector might be moving amid overall market weakness due to economic slowdown concerns following recent U.S. data, which could negatively impact demand.

Last week, the company reported second-quarter revenue of $93.060 billion, beating the consensus of $90.987 billion, and adjusted EPS of $2.14, surpassing the $2.01 estimate.

Truist Securities analyst Neal Dingmann writes that Exxon is already benefiting from the Pioneer acquisition, with Permian production nearly doubling to 1.2 mmboepd and potential operational efficiencies from the combined assets. Additionally, Guyana production reached a record over 630 mbpd, surpassing the current FPSO capacity.

The analyst adds that despite potential efficiencies, the company's free cash flow yield might only be in the high single digits next quarter, trailing larger E&Ps.

However, the analyst expects it to sustain over $4 billion in dividends and a similar amount in stock buybacks (having paid $5.2 billion last quarter), though its yields are lower compared to some major operators.

The analyst revised estimates for EBITDAX to $76.3 billion (from $78.9 billion) vs. consensus of $76.8 billion in FY24 and $92.9 billion (from $94.3 billion) vs. cons. of $82.3 billion in FY25.

Dingmann reiterated the Hold rating with a price target of $121.

Goldman Sachs analyst Neil Mehta (Neutral-rated with a $119 price target) says that worldwide production was 4,358 MBOE/d, exceeding GS's estimate of 4,212 MBOE/d and FactSet's consensus of 4,234 MBOE/d, driven by higher U.S. and international liquids and increased international gas production.

The analyst forecasts EBITDA of $77.1 billion in FY24, $83.4 billion in FY25 and, $87.8 billion in FY26.

Investors can gain exposure to the XOM via Energy Select Sector SPDR Fund XLE and IShares U.S. Energy ETF IYE.

Also Read: Exxon Mobil Arbitration Throws Wrench in Chevron-Hess Merger Timeline: Report

Price Action: XOM shares are down 1.29% at $115.37 at the last check Monday.

Disclaimer: This content was partially produced with the help of AI tools and was reviewed and published by Benzinga editors.

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