UPDATE: Goldman Sachs Sees Limited Catalysts for ExxonMobil (XOM) Lowers Rating to Neutral
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(Updated - October 31, 2016 8:26 AM EDT)
Goldman Sachs downgraded ExxonMobil (NYSE: XOM) from Conviction Buy to Neutral with a price target of $93.00 (prior $98.00). Analyst Neil Mehta said he sees limited catalysts and said risk/reward is more favorable in Chevron (NYSE: CVX).
"Since our upgrade to Buy in March 2015, we have viewed XOM as a defensive winner, with sharp downside to capital spending forecasts and near-term growth from international project start-ups," said Mehta. "However, as we look forward into 2017/2018, we see CVX as the Super Major better positioned to generate cash flow, production growth and deliver a multiple re-rating. We see few catalysts for XOM to drive relative outperformance vs. Energy, especially in a rangebound commodity price environment. Based on comments at the analyst day and conference calls, XOM has been hesitant to pursue large scale M&A, which may have provided greater investor confidence around reserve replacement/growth."
The analsyt added, "We see more upside in CVX than XOM given higher levels of growth with the in-service of large Australia LNG projects; greater clarity on maximizing value in the Permian and US unconventional plays; and stronger free cash flow generation in 2017/2018."
Shares of ExxonMobil closed at $84.78 yesterday.
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