Exxon's Guyana Project Seen Boosting Cash Flow, Analyst Predicts Dividend Bump
Portfolio Pulse from Lekha Gupta
BofA Securities analyst Doug Leggate maintains a Buy rating on Exxon Mobil Corp (XOM) with a price target of $140, following its Q4 results. The company's Guyana project is expected to significantly contribute to free cash flow, potentially doubling it by 2027 compared to 2019. Despite a decrease in Q4 adjusted net profit and revenue, the project, along with strategic acquisitions, is anticipated to lower Exxon's post-dividend breakeven to $40 Brent by 2024. This could lead to a reset in dividend growth and share buybacks, positioning Exxon for best-in-class per share growth among peers. Leggate revised EPS estimates upwards for FY24, FY25, and FY26.
February 05, 2024 | 6:06 pm
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POSITIVE IMPACT
Exxon Mobil Corp's Guyana project and strategic acquisitions are expected to significantly boost its cash flow and lower its post-dividend breakeven to $40 Brent by 2024. This positions Exxon for a potential dividend growth reset and increased share buybacks, with EPS estimates revised upwards for FY24-FY26.
The positive outlook from BofA Securities analyst Doug Leggate, including the upward revision of EPS estimates and the expected significant contribution of the Guyana project to Exxon's cash flow, suggests a bullish short-term impact on XOM's stock price. The anticipation of a dividend growth reset and increased share buybacks further supports this positive outlook.
CONFIDENCE 85
IMPORTANCE 90
RELEVANCE 100