Shares of Exxon Mobil hit new highs this week, but Wall Street analysts expect the energy stock to remain around that level a year from now. Exxon closed at a new all-time high of $104.59 on Wednesday, breaking above $100 this week for the first time since 2014. The stock is among the top 10 best performers in the S&P 500 this year, up 67% over 2022. However, analysts expect Exxon’s share price to remain relatively stable on an average 12-month basis. According to FactSet, the consensus price target on the stock is $103.02. Oil and natural gas prices have risen this year, prompting a rally in energy stocks. US West Texas Intermediate crude is up over 67% in 2022, while international benchmark Brent crude is up over 64%. This change in commodity prices has occurred between low supply and high demand. The war in Ukraine has disrupted global energy supplies, imposed sanctions against Russian exports, as well as strengthened demand after the Covid sanctions. “It’s a very constructive environment for oil and gas companies as a whole. It looks like energy prices will remain supported through the end of the year and that should support Exxon as well as its peers,” said Energy Equity Research. Director of Jason Gabelman Cowen said. “If you’re thinking about the next six months, I think the stock should continue to climb.” But higher energy prices could turn into challenges for companies like Exxon after the end of this year if economies slow down, according to Gabelman, who has ratings on the stock. Gabelman said, “You have to wonder if some of these tailwinds are going to turn into headwinds. In particular, do strong oil prices cause demand destruction, and does that help normalize the environment? It will take time.” CFRA’s Stewart Glickman calls for buying Exxon shares, but likewise sees changes in demand as a major risk to the stock. “Our biggest near-term concern is that higher energy prices (if they persist) eventually lead to a sharp recession, which could lead to such prices being significantly lower,” Glickman said in a note on Thursday. ” In addition, when compared to peers, Exxon has greater exposure to its downstream refining-and-marketing business versus upstream exploration and production. “When it comes to downstream, credit spreads are getting much better. Still, on a relative basis, I don’t think those margins will compare to any company that has a net short-cycle upstream margin,” Truist Securities’ Neil Dingman said. , which gives the exon a hold rate. Dingman said he prefers pure E&P names like EOG Resources. As Exxon shares hit historic highs, this could be the peak for the stock, according to Dan Nathan of Risk Reversal Advisor. “All these people are piling on ExxonMobil…”There’s no point in piling in these names right now,” Nathan said Wednesday on CNBC’s “Fast Money.” Morgan Stanley’s Devin McDermott believes That is, Exxon’s rally still has legs, even if the economic environment has turned rocker. “Weak economic outlook will slow global oil demand growth somewhat,” McDermott said in a research note on Monday. “We remain constructive and look to outperform despite slowing economic growth, but maintain a massive bias towards large producers,” she said. McDermott’s is one of the U.S. integrated energy companies preferred over competitor Chevron. The analyst has an overweight rating on Exxon and a $107 price target. In addition to oil and natural gas prices, analysts say, investors should consider should also keep an eye on total shareholder returns. Exxon has accelerated its stock buyback program this year. The company bought back $2.1 billion of stock during the first quarter and said it would increase its share repurchase program. Irving, Texas Based Colossus now expects to buy back a combined $30 billion in stock in 2022 and 2023. Gabelman said, “These are value stocks at the end of the day, and people may want to do as much as they can in times of additional cash flow generation.” want to get cash return.” “We will see given this environment If they continue to be aggressive or if some of these companies stall, it looks like the risk is going to increase a bit late in the year.”
