Exxon Mobil's Upstream Earnings Shine Despite Refining, Chemicals Margins Concerns

Mizuho analyst Nitin Kumar reiterated a Buy rating on Exxon Mobil Corp XOM with a price target of $139.

The analyst flags how weak refining and chemicals margins cloud strong upstream earnings.

XOM published its 8-K with 3Q23 earnings considerations last night. Compared to his prior estimates, the implied Upstream earnings range of $5.7 billion - $6.3 billion was the most prominent 'beat' (MSUSAe previous estimate was $5.1 billion vs. consensus at $5.1 billion). 

The company noted ~$0.9 billion - $1.3 billion higher earnings in the Upstream segment due to better Q/Q liquids realizations. 

This was complemented by ~$0.2 billion - $0.6 billion higher earnings driven by better gas pricing and ~ $0.1 billion - $0.3 billion Q/Q improvement from lower maintenance activity. 

Kumar updated his Upstream earnings estimate to $5.9 billion, near the midpoint of the implied range per company disclosure.

Refining (Energy Products) earnings are expected to be weaker compared to his prior model ($3.7 billion) and consensus ($3.2 billion) with the implied range between $2.6 billion - $3.4 billion (midpoint of $3.0 billion). A late-quarter decline in cracks and lower margin capture were likely drivers of the variance compared to Kumar's previous estimates. 

Finally, Kumar notes materially weaker Chemicals earnings (new MSUSAe $0.4 billion vs. prior 1.2 billion, consensus $0.8 billion, and implied range of $0.1 billion - $0.5 billion) driven primarily by lower margins. Specialty Products earnings are likely at ~ $0.6 billion, in line with his (unchanged) estimates and consensus.

Kumar's overall EPS estimate is $2.33 (vs. $2.48 prior) and is in line with consensus at $2.33. The implied range from the 8-K is $2.04 - $2.58. Kumar's CFPS estimate of $3.60 also aligns with the current consensus. 

The analyst projects Q3 revenue of $90.98 billion vs. consensus $87.51 billion and EPS of $2.33 vs. consensus $2.37.

Price Action: XOM shares traded lower by 2.27% at $108.97 on the last check Thursday.

Market News and Data brought to you by Benzinga APIs
Comments
Loading...
date
ticker
name
Price Target
Upside/Downside
Recommendation
Firm
Posted In: NewsPrice TargetReiterationAnalyst RatingsBriefsExpert Ideas
Benzinga simplifies the market for smarter investing

Trade confidently with insights and alerts from analyst ratings, free reports and breaking news that affects the stocks you care about.

Join Now: Free!