Goldman Sachs Flags Weak Q4 Guidance For Exxon Amid Weak Upstream And Chemical Results

by Lekha Gupta Benzinga Editor

Zinger Key Points

Goldman Sachs' Implied EPS at the mid-point came in at ~$1.50 vs. GS estimate of $1.80.
Analyst maintains Neutral rating with a price target of $125, citing weaker-than-expected earnings in key segments.
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Goldman Sachs analyst Neil Mehta expressed views on Exxon Mobil Corporation‘s XOM trading update reported yesterday.

The oil giant anticipates changes in oil prices to reduce fourth-quarter upstream earnings Q/Q by $(0.9) billion to $(0.5) billion.

Conversely, changes in gas prices are expected to impact its upstream results by between $0.0 billion and $0.4 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 implied EPS at the midpoint was ~$1.50, below their estimate of $1.80 and FactSet consensus of $1.76.

The difference is mainly due to weaker-than-expected results in the Upstream, Downstream, and Chemicals segments, adds the analyst.

Mehta writes that implied Upstream earnings were ~$5.7 billion at the mid-point, below their estimate of ~$6.2 billion.

The analyst adds that implied Downstream earnings, including Energy and Specialty Products, were ~$1.0 billion at the mid-point, below their estimate of ~$1.4 billion.

Moreover, implied Chemicals earnings were ~$493 million at the mid-point, falling short of their estimate of ~$853 million.

Goldman Sachs rated the company Neutral with a price target of $125.

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 2.43% at $106.11 at the last check Wednesday.

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