This energy giant finally has been removed from the penalty box at Goldman Sachs, which recently upgraded the shares to Buy. Exxon Mobil Corp. (NYSE: XOM) is the world’s largest international integrated oil and gas company. It explores for and produces crude oil and natural gas in the United States, Canada, South America, Europe, Africa and elsewhere.
Exxon also manufactures and markets commodity petrochemicals, including olefins, aromatics, polyethylene and polypropylene plastics, and specialty products, and it transports and sells crude oil, natural gas and petroleum products.
In the report on the long-awaited upgrade to Buy, the analysts noted that Exxon has meaningfully cut its capital spending outlook for next year to a range of $17 billion to $19 billion, compared with an earlier estimate of between $30 billion and $35 billion. Its guidance for 2022 to 2025 is a range of $20 billion to $25 billion.
Exxon expects to exceed its initial guidance of a 15% reduction in cash operating expenses in 2020, due in part to a global workforce reduction of the same percentage point magnitude by the end of 2021.
The company pays investors a 7.96% dividend, which probably will continue to be defended. Goldman Sachs has a $52 price target, well above the $46.66 consensus target. Exxon Mobil stock closed at $43.70 on Wednesday.
This is a solid way for more conservative accounts to play the energy sector, and the stock resides in the U.S. Conviction list stock. Marathon Petroleum Corp. (NYSE: MPC) is one of the largest independent petroleum refining and marketing companies in the United States.
Until just recently, the company operated approximately 2,750 retail sites under the Marathon and Speedway brands. In addition, it operates a logistics network of pipelines, barges, trucks and terminals that store and transport crude and products.
In August, the company announced it would sell Speedway to 7-11 in an all-cash deal valued at $21 billion, or $16.5 billion after-tax. The sale transforms the company’s balance sheet and creates options to revisit the corporate structure of MPLX. Many on Wall Street feel that with Speedway removed, the dislocation in refining value becomes even more transparent as the company trades much cheaper than its industry peers do.
The analysts have said this about the Speedway sale:
The company has indicated that it will significantly strengthen its balance sheet with the cash and return excess capital to shareholders in the form of buybacks. While Exxon trades at a valuation premium to its sum-of-the-parts, we continue to highlight that Marathon Petroleum trades at a discount to its sum-of-the-parts valuation.
Shareholders receive a 5.57% dividend. The $49 Goldman Sachs price target compares with the $46.27 consensus target. Marathon Petroleum stock was last seen trading at $41.65.