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ExxonMobil stock target raised $15 by Piper Sandler, keeps overweight

EditorAhmed Abdulazez Abdulkadir
Published 04/18/2024, 10:26 AM
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XOM
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On Thursday, Piper Sandler showed continued favor for ExxonMobil (NYSE:NYSE:XOM), increasing the stock's price target to $145.00 from $130.00, while maintaining an Overweight rating. The firm has consistently preferred ExxonMobil over Chevron (NYSE:CVX) for several years.

The current arbitration case involving the two companies has led to a belief that the uncertainty makes Chevron a less attractive option for new investments until the resolution becomes clear.

According to Piper Sandler, if ExxonMobil emerges successfully from the arbitration, it could create a significant valuation gap between ExxonMobil and Chevron, potentially reflected in a 3.0%-4.0% spread in free cash flow (FCF) yield. The market is currently pricing in a high chance of ExxonMobil's victory, as evidenced by Chevron trading at approximately a 3.0% discount to ExxonMobil based on the 2025 estimated FCF yield.

The firm anticipates that ExxonMobil's near-term outperformance may be limited, but acknowledges that Chevron could narrow the gap substantially if the HES deal is finalized.

Moreover, Piper Sandler sees potential upside to the Street's estimates for ExxonMobil, suggesting a 5% increase over consensus, driven by strong production trends and refining tailwinds, despite some headwinds related to timing effects. There are also growing expectations that the Pioneer Natural Resources (NYSE:PXD) deal could be finalized before the end of the second quarter.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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