Goldman Sachs Stays On The Sidelines On Exxon Mobil - Here's Why

Goldman Sachs analyst Neil Mehta cut the price forecast for Exxon Mobil Corporation XOM from $125 to $123 ahead of the company’s fourth-quarter results, which will be reported on January 31, 2025.

The analyst updates ExxonMobil estimates to reflect mark-to-market commodity prices and incremental Upstream guidance, maintaining a Neutral rating.

While the company benefits from strong execution, shareholder returns (~8% capital returns yield in 2025/2026), and premium Upstream assets (Permian, Guyana, LNG), its relative valuation keeps the analyst on the sidelines.

On January 8, the oil giant stated that it anticipates changes in oil prices to reduce fourth-quarter upstream earnings Q/Q by $(0.9) billion to $(0.5) billion.

On the other hand, Exxon Mobil projects that variations in industry margins will impact energy products earnings by $(0.7) billion – $(0.3) billion, specialty products earnings by $(0.1) billion – $0.1 billion, and chemical products earnings by $(0.5) billion – $(0.3) billion.

The analyst writes that this implies a ~$1.50 EPS midpoint, with Upstream, Downstream, and Chemicals earnings below versus prior GS expectations.

Mehta’s 2024-2026 EPS estimates are revised to $7.63 (from $7.91), $8.17 (from $8.35) and $9.97 (from $9.71), respectively, reflecting mark-to-market commodity prices and refining margins, production adjustments, and pricing realization tweaks.

Investors can gain exposure to XOM via Vanguard Energy ETF VDE and SPDR Select Sector Fund – Energy Select Sector XLE.

Price Action: XOM shares are down 1.28% at $108.74 at last check Friday.

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