Is Exxon Mobil Stock (NYSE:XOM) A Buy Heading In To Earnings? Analysts Bullish

Exxon Mobil (NYSE: XOM) first-quarter call on April 26, 2024 may be one to add to your earnings calendar. Whilst there will be plenty of action in the coming earnings season, XOM is expected to benefit from the increase in the West Texas Intermediate (WTI) crude oil prices, which have bolstered its earnings potential.

On Friday, there was further news that Exxon has made a final investment decision for the Whiptail development (offshore Guyana). Whiptail is the sixth project on the Stabroek block, and is expected to add approximately 250,000 barrels of daily capacity by the end of 2027 now that government and regulatory approval has been received.

The energy giant's strategic manoeuvres have already begun to reshape its performance metrics, particularly with the mammoth acquisition of Pioneer Resources in a staggering $59.5 billion all-stock transaction. This acquisition has supersized Exxon Mobil's Permian basin production, now at 1.3 million barrels of oil equivalent per day, reflecting a significant advance in the company's operational capabilities and future prospects.

Financial analysts forecast a sizable leap in Exxon Mobil's financial health, with expectations of free cash flow approximating $9.6 to $9.7 billion for Q1 2024. This figure is a noteworthy ascent from the previous year and is set to provide a hefty financial cushion for the company.

Exxon Mobil had previously witnessed ebbs in its free cash flow due to the undulations in petroleum pricing. However, with the WTI crude oil price enjoying a 21% uptick in the first quarter of 2024, Exxon Mobil may well see a reversal of fortune in its financial outcomes.

Exxon Mobil Analyst Price Target Upgrades Hitting Pre Earnings

In the stock market, Exxon Mobil’s shares are seen as an attractive investment, trading at a price-to-earnings ratio of 13.5X. The last two weeks, there have been nothing but price target upgrades from the analysts covering Exxon Mobil shares, the latest of which coming at the end of the last trading week some of the most bullish on the street.

Josh Silverstein, analyst at UBS upgraded his XOM price target to $150 (from $133) and keeps in place the ‘buy' rating. UBS is bullish on the positioning of Exxon Mobil to capture strength in crude oil and downstream margins, and in a research to investors, indicated that the closing of the Pioneer Natural (PXD) deal in Q2 will be the next key catalyst. With the current share price sitting a shade above $120, that represents 25% upside on a dividend paying stock.

Other firms to upgrade in the past weeks include Scotiabank ($129 from $114), Truist ($146 from $140), Wells Fargo ($138 from $126) TD Cohen ($120 from $115), and Mizuho ($125 from $119). Barclays also initiated coverage of XOM shares with a firm start, giving the stock a rating of ‘overweight', and a price target of $147.

Another aspect of Exxon Mobil’s financial strategy that has captured attention is its commitment to stock repurchases. The company is not just active but is projected to be the leading player in capital expenditure on share buybacks in FY 2024, reflecting confidence in its stock value.

Despite its strong performance (up 17.59% YTD), Exxon Mobil’s stock is still being perceived by some analysts as undervalued, suggesting there is room for growth.

The company’s optimistic outlook is further entrenched by factors beyond its direct control. The international petroleum market is witnessing supportive trends, such as OPEC+'s strategic supply restrictions and subsequent rising prices. Moreover, recent approvals from governments for capacity expansion in promising territories strengthen the potential for further output gains.