Exxon Mobil shares rise again after JP Morgan analyst turns bullish for the first time in 7 years

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Shares of Exxon Mobil Corp. rose on Wednesday, heading for the longest winning streak in 16 months, after JP Morgan analyst Phil Gresh turned bullish on the oil giant for the first time, citing an improved financial outlook and a more reasonable appraisal. The XOM stock, + 2.22%, was up 1.3% in premarket trading. It has risen 16.2% in the last seven sessions, to close Tuesday in a seven-month high. An eighth consecutive win would be the longest streak since the eight-day streak that ended on September 10, 2019.

“For the first time in seven years of integrated oil coverage since the industry peak in 2014, we are improving [Exxon Mobil] I’m overweight, ”Gresh wrote in a note to clients. Gresh improved the stock from neutral and also raised its price target to $ 56 from $ 50. He said there were many reasons not to recommend buying Exxon Mobil shares in the past, starting with a “full valuation” in 2014-2016 to a “lack of capital discipline” in 2017-2019 and a “lack of defense “during the Industry recession caused by the COVID-19 pandemic. “As we sit here today, we think the bar is materially lower, execution could finally be turning upside down, 2021 consensus too low (even at $ 50 / bbl. Brent), dividend yield> 7% it’s safer and it’s more reasonable, ”Gresh wrote. “Perhaps most importantly, we believe that capital discipline is improving, with the [$20 billion to $25 billion] The investment budget is a self-imposed step necessary to preserve the dividend and balance sheet. “No fewer than three analysts have updated Exxon Mobil this week, according to FactSet. But bulls are still a minority on Wall Street. Nine of the 27 Analysts surveyed by FactSet rated Exxon Mobil as the equivalent to buy, while 15 rated it as held and three as sold. Based on the percentage of analysts with buy ratings, Gresh said that Exxon Mobil has the worst sentiment of the majors. oil companies and remains close to the lower limit of its historical range. The recent rally in the stock comes after the stock plunged 40.9% in 2020, while the publicly traded fund SPDR Energy Select Sector XLE, + 3.49% fell 36.9% and the S&P 500 SPX index, + 0.04% rose 16.3%. Since August 31, when it exited the Dow Jones Industrial Average DJIA, + 0.19% , Exxon shares Mobil has risen 19.9%, while Chevron Corp. CVX shares, + 1.90%, which remain on the Dow, have gained 11.2%. .