XOM Stock: Why Analysts Are Warming Up to Exxon Mobil Corporation

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xom - XOM Stock: Why Analysts Are Warming Up to Exxon Mobil Corporation

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Exxon Mobil Corporation (XOM) stock has seen better days. Just a few years ago, shares were sitting above $100 per share; two years later, they’ve done less than nothing for shareholders, with shares resting around the $90 level today.

XOM Stock: Why Analysts Are Warming Up to Exxon Mobil Corporation

It’s no secret that the oil and gas industry has been absolutely decimated since 2014, as crude oil’s precipitous fall that began in mid-2014 cut prices per barrel from over $100 to a trough around $33 earlier this year.

But the tides are turning. XOM stock is up 16% already in 2016 as crude has rallied about 20% higher. And, for the first time in a while, bigwig analysts are starting to get on XOM’s side.

XOM Stock Price Target Raised 27%

Exxon stock received some great news yesterday, as analysts at Morgan Stanley raised the XOM price target from $75 per share to $95 per share. That’s a dramatic increase, and one that is frankly long overdue.

Morgan Stanley listed a few reasons for the price hike boost, including a “stronger balance sheet, greater downstream exposure and integration, and higher more secure yield.”

Downstream exposure and integration refers to XOM’s refining capabilities, which have been helping to hedge Exxon’s results during the oil price meltdown. Oil refiners actually tend to have better margins when energy prices are low, as they have a little more room for markup.

This hedging aspect is part of what makes major oil and gas players like Exxon and Chevron Corporation (CVX) such unique plays.

Another well-known plus for XOM stock owners — the dividend yield. Currently resting at 3.3%, this differentiates Exxon from many other stocks in the market, especially during a time of uber-low interest rates. The German 10-year bond yield, for instance, just crossed into negative territory for the first time ever.

Analysts aren’t the only ones loving on Exxon stock. InvestorPlace‘s own James Brumley recently named XOM one of the “10 Best Dividend Achievers You Can Buy.” According to Brumley,

“Crude oil prices are up more than 50% since February’s low, and though odds are good we’ll see some sort of commodity pushback in the foreseeable future, the worst seems to all be in the past. Going forward, it will get at least marginally better.”

He adds,

“To that end, although XOM has gained 32% from last August’s low, the dividend yield is still a healthy 3.3%, and there’s still plenty of room for the bottom line to grow back to its pre-2014 levels as crude continues to make a long-term recovery.”

That certainly seems to be the prevailing opinion nowadays. And since betting on the energy sector doesn’t get much safer than Exxon, the stock is definitely worth a look.

As of this writing, John Divine did not hold a position in any of the aforementioned securities. You can follow him on Twitter at @divinebizkid or email him at editor@investorplace.com.

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Article printed from InvestorPlace Media, https://investorplace.com/2016/06/xom-stock-analysts-warming-exxon-mobil-corporation/.

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