Exxon Stock (NYSE:XOM)
This year, energy stocks have lagged behind the S&P 500 (INDEXSP:INX), and analysts anticipate that earnings will decline from 2022 levels for the majority of energy businesses. Even if the industry is doing well, investors are showing less interest because oil and natural gas prices appear to have passed their all-time high.
In spite of this, market watchers have been more bullish on a number of stocks in recent weeks, as evidenced by an increase in their earnings forecasts following the release of quarterly financial results.
Barron.com conducted a search within the S&P1500 for energy businesses where analysts had raised their predictions for the full year’s earnings during the course of the previous month in response to the outcomes of the fourth quarter. When analysts raise their estimates, it almost often indicates that they picked up on something during the company’s earnings call or in the company’s projections that gave them a more upbeat outlook regarding the performance of the companies in question this year.
Over the course of the previous month, at least eight analysts have revised their earnings forecasts for seven different firms, raising their expectations for those companies’ 2023 performance. All seven stocks have suffered losses due to the general decline in the price of oil and gas over the past three months.
Exxon Mobil Corporation (NYSE:XOM) had their 2023 earnings predictions raised by fifteen analysts in the last month. Several of these analysts were responding to Exxon’s better-than-expected earnings report that was published on January 31. For example, the earnings per share forecast that Bank of America analyst Doug Leggate had previously provided was increased to $9.32 from $9.21.
According to what Leggate said in his article, “Exxon has emerged from an extended period of counter-cyclical investment as the sole material free cash flow growth story of the integrated oils.” He recommends purchasing shares and has a price objective of $140.
Refiners make up a number of the companies whose shares are attracting favorable attention from analysts. Following a year in which profit margins for a variety of fuels reached record highs due to shortages brought on by Russia’s invasion of Ukraine, those margins have remained relatively high in recent weeks, albeit not at the levels they reached in the previous year. As a result of the United States and European Union’s prohibition on Russian fuel and their imposition of price limitations on exports from other countries, some analysts anticipate that some products, such as diesel, will once again be in limited supply this year.
Valero Energy Corporation (NYSE:VLO) has led the group, receiving improvements to its earnings estimates from 15 different analysts during the past month. Phillips 66 (PSX), which is currently trading at a loss of 0.97%, and Marathon Petroleum (NYSE:MPC), which is currently trading at a loss of 1.57%, have also had multiple favorable adjustments.
We believe Valero remains extremely well-positioned to capitalize on the strength of the global refining backdrop as the ripple effects of Europe’s energy crisis add to the advantages of Valero’s top-tier portfolio,” wrote Jefferies analyst Justin Jenkins, who increased his full-year EPS estimate to $25 from $21. “We believe Valero remains extremely well-positioned to capitalize on the strength of the global refining backdrop as the ripple effects of Europe’s energy crisis add to the advantages of Valero’s top He has a recommendation of Strong Buy for the shares and a price target of $174.
The attention of experts has also been drawn to a number of oil service and equipment companies. Estimates for both NOV (NYSE:NOV) and Helmerich & Payne (NYSE:HP) have been revised upwards multiple times in a positive direction. As a result of the epidemic, oil, and gas firms are expected to be required to pay a higher price for services as they expand the amount of drilling they conduct.
The lone independent oil producer to make the list is Marathon Oil (MRO), which you can see here. The Houston company has boosted the number of shares it buys back, which typically contributes to a rise in earnings per share.
On the most recent earnings call for the company, CEO Lee Tillman stated that “We have generated per share growth across all the measures that matter with a steady share repurchase program that leads our peers in addition to a durable and competitive base dividend.”
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