XOM Stock Forecast: Is Exxon a Buy?

XOM Stock Forecast: Is Exxon a Buy?
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25th May, XOM Stock Forecast: The short-term recommendation is to Buy the stock.

2 ANALYSTS

Exxon Mobil Corporation Latest Price

Metric
Value
Trend
Share Volume
24.2 M
Lower
Average Share Volume
24.5 M
N/A
Forward PE (1 Year)
9.28
N/A
Exxon Mobil’s Q1 2022 Highlights:

• On April 29th, Exxon Mobil released their first quarter, 2022 earnings.
• Total Earnings: $5.5 Billion which when compared to Q4 2021 earnings ($8.8 Billion) is significantly
lower.
• They have increased their buy back to $30 billion through 2023.
• An unfavorable element mentioned in the earnings is a $3.4 billion after tax charge after XOM’s exit
from Russia Sakhalin-1.
• Capital and Exploration Expenditure: $4.9 Billion.

XOM Stock Forecast: Performance Chart

Stock Name
5 days
1 Month
6 Months
1 Year
+1.9%
+14.7%
+54.1%
+62.0%

Exxon and Massachusetts Lawsuit

Exxon was sued by Attorney General Maura Healey in 2019 under suspicion that they are not honest about the impact of their fossil fuel products on the climate to their investors and the general public. The company denied any such allegations and remained tact on the fact that they are transparent about their climate change consequences.

The Massachusetts’ high court denied the company’s request to dismiss the lawsuit.

XOM Stock Forecast: Support and Resistance

Source
Support
Resistance
Recommendation
$93 (S3)
$94 (R1)
Buy
$90 (S3)
$95 (R1)
Buy

Russia And Ukraine War World has been in turmoil lately due to invasion of Ukraine by Russia. It has hit the economies by a large extent and every second industry will be affected by this war for a longer period of time than initially was expected. It has also contributed to keep the crude oil like Brent crude and WTI prices very volatile in last one month since mid-February 2022. Investors are looking for stocks to ride off this volatility in crude price. We will explore the option of Exxon Mobil in this article

XOM Stock Forecast: CrowdWisdom360-Insights

  • Exxon Mobil has decided to increase natural gas output from the Kipper field in the Gippsland Basin in southeastern Australia. The company made this move to reduce domestic gas supply chain shortages.
  • In 2023, it is expected that the Gippsland Basin Kipper field would generate 30 petajoules (PJ). In the next five years, ExxonMobil is going to invest $291 million to produce 200 PJ of natural gas.
  • Exxon Mobil’s stock has risen sharply in recent weeks as a result of Russia’s war with Ukraine and the resulting surge in energy prices. Oil companies are gradually boosting production in response to rising demand and pricing.
  • ExxonMobil decided to keep its dividend, causing the company’s debt to grow even more. Despite a difficult market, Exxon Mobil’s commitment to its dividend is what draws income investors to the stock. In recent times, Exxon Mobil announced a $10 billion stock repurchase program.
  • Exxon Mobil Corp (XOM) has climbed 45.41 percent in the last year, and Wall Street analysts have given it a Buy rating. The jump in oil prices following the invasion would be a key point to keep an eye on.
  • Oil Prices have gone higher amidst the current Russia-Ukraine tension. With Russia and Ukraine unable to come to a conclusion, there is a concerning risk of oil supply in the market.
  • XOM is included in Nasdaq’s most active pre-market stocks for May 25th.
  • So, The recommendation is to buy this stock for the short-term.

XOM Stock Forecast: Latest Tweets

XOM Stock Forecast: Bull Case

US and West Sanctions on Russia import of Oil and Natural Gas – For a start, Russia exports 5 million barrels of oil per day. It has been doing the same for over many years. But recent invasion of Russia over Ukraine has changed it completely. US president in first ever state of Union address imposed sanctions on Russia, over banks and various other things, but spared oil and gas imports.

But last week, he has announced fresh sanctions, including oil and gas imports from Russia. Since this news broke out, Brent crude has touched new heights touching $130 per barrel. This has led to increase in revenue and profitability of oil companies and Exxon Mobil will surely be benefited from this move in near term. Also, adding to it, European Union is also planning to cut Russian imports by end of the year. Therefore, it may signal towards prices of crude prices remaining higher over a longer period of time and that is a boon for all petroleum industries

XOM Stock Forecast: Better than expected Q4 2021-22 results

Exxon Mobil is a market leader in its field and always produces above par results. But the trend of results is positively changing over the period of last couple of years. This is clearly seen in the recently announced Q4 2021-22 results. Earnings per share came at $2.05 against the expectation of $1.94 per share. This has significantly increased from $0.65 per share in first quarter 2021-22. Also, net revenue came at $81.93 billion, and net income at $8.87 billion.

In terms of revenue, it has increased from $46 billion YoY and more importantly net income has gone up from negative $20.07 billion to positive $8.87 billion. This performance is likely to continue in future, at least for near term as crude prices are not expected to come down below $100 per barrel any time soon. 

Read: RIVIAN Stock Forecast

XOM Stock Forecast: Outperformed S&P 500 and Nasdaq

Exxon Mobil has outperformed S&P 500 and Nasdaq index in various time frames including past one month, six months and one year. In last one year, S&P 500 has given only 8.23 % returns (as of 11.03.2022), while XOM stock is up by 39.23 %. In last six months, Nasdaq index has given -13.33% return, while in same duration, XOM stock has given fantastic positive return of 54.16 %. The same is the case in comparison over three months’ time frame or performance over year till date. It shows that, at the time of volatile global market, Exxon Mobil is there to ride us through.     

Technical Analysis shows there is more to come-Many people believe that Exxon Mobil has run up too fast and furious and it may come down with that speed, or at best it is time of consolidation and it may not give same return in future as compared to last six months. But technical analysis shows something different. While it is true that it has given good returns recently, but it is also true that it is trading above all the moving averages, be it simple or exponential for all time frames.

It is trading above 10, 20, 30, 50, 100 and 200 days moving averages, which is definitely a bullish sign for any stock. Moreover, momentum indicator MACD (12,26) is also signaling towards buy signal. Also, Average Directional Index (14) is neutral signaling that current momentum may not change anytime soon. Overall, it is a buy from technical analysis perspective.

XOM Stock Forecast: Bear Case

Too much dependence on Oil and Gas rates-Every coin is double faced. For Exxon Mobil, dependence on crude oil prices is kind of similar. While we are seeing the positive side of it recently over the past six months, but it has downside, which was visible in the period of March-November 2020. Crude prices touched all time low, responding to lesser demands and with that XOM share prices dwindled from $68.56 on 17th January 2020 to $32.74 on 20th March 2020.

It crashed more than 50% in a single month. Moreover, it stayed there at least till October 2020 and it was only after that, it started moving higher along with prices of crude. It can be well established that it has direct relationship with crude price, which is not in control of company, and in the times of distress in crude prices, it is seen that company’s fundamentals have not bailed it out.

World is moving towards Renewable energy sources and Electric Cars- While we talk about great petroleum companies like British Petroleum and Exxon Mobil and their great future ahead, it is also too being imbibed that world is slowly and steadily moving towards renewable resources and more specifically to electric vehicles. This move was specifically taken to reduce the volatility in crude prices which we are observing now.

This is likely to reduce the demand of fossil fuels in future, next decade, and with that will reduce the revenue of petroleum companies. US president announced that at least 50% of the vehicles should be EVs by 2030 and has passed a mammoth bill of $7.5 billion for the same. All these factors are surely going to impact the returns of Exxon Mobil share price

XOM Stock Forecast: XOM Buy or Sell?

Exxon Mobil share is meant to ride us through the phase of volatility. It is meant to be hold in the times of uncertain global scenarios which will impact crude prices positively and keep them higher. Apart from it, company’s fundamentals are very good and it is improving on its earnings and cash flow in last couple of years post Covid. Operating cash flow has gone up from $14.67 billion in 2020 to $48 billion in 2021.

So, XOM buy or sell? There is so much to like about Exxon Mobil as a company but its dependence on crude prices cannot be hidden and in the generation of EVs, fossil fuels will surely find it hard to retain their prices.

XOM stock forecast

-Vineet Agarwal

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions.

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