It’s time to buy “leader of the pack” Exxon Mobil , according to UBS. Analyst Josh Silverstein assumed coverage of Exxon Mobil and upgraded shares to buy from neutral, and raised his price target, saying the energy giant is set to outpace its peers. “We see the Integrated Oils as best positioned to outperform this upcycle, driven by improved balance sheets and significantly more capital efficient asset bases that generate higher FCF with greater visibility to support consistent shareholder returns,” Silverstein wrote to clients on Tuesday. XOM YTD mountain Exxon Mobil shares YTD Exxon Mobil shares are higher by 6% in 2023 even after a slight dip in energy prices. Brent crude futures and West Texas Intermediate U.S. crude are down by about 2% each this year. Regardless, that follows a gangbuster two years for Exxon Mobil, which jumped 80% in 2022 and 48% the year prior. The analyst’s $144 price target, hiked up from $125 previously, implies shares could rise another 23% from Tuesday’s closing price. The stock is down nearly 1% in Wednesday premarket trading. Silverstein expects that investor interest in firms with high free cash flow and shareholder returns, as well as Exxon Mobil’s growth both upstream and downstream, will buoy the stock. Upstream refers to the exploration and production of oil and gas, while downstream refers to the final process in delivering consumers petroleum products. “For XOM, our positive outlook is driven by high margin upstream volume growth 2%/3% above 2024/25 Consensus that are paired [with] annual Downstream/Chemicals capacity additions, while maintaining capex at $20-25Bn/yr,” Silverstein wrote. “Additionally, we forecast that the balance sheet goes into a net cash position by mid-2024, providing flexibility to push shareholder returns above the $17.5Bn/yr buyback pace, while providing downside support,” he added. —CNBC’s Michael Bloom contributed to this report.
