Bullish macro view points to greater share price upside for others April 27, 2007
Goldman Sachs
What's changed
Exxon Mobil reported 1Q 2007 EPS of $1.62, ahead of the $1.52 First Call consensus and our $1.51 expectation. The bulk of the positive variance versus our estimate was in chemicals, with corporate charges also contributing favorably.
Implications
Exxon Mobil remains the industry leader and in many respects the last true super major. The management and employees of Exxon continue to execute exceptionally well in capturing the upside in earnings available in this extended period of robust industry commodity prices. While margin capture is excellent and the company’s well-ingrained financial discipline has not changed, our bullish outlook for 2H 2007 crude oil prices and refining margins we think will drive even greater share price upside in higher-beta large-cap oil companies like Valero Energy, Marathon Oil, Suncor Energy, Occidental Petroleum, and Murphy Oil, all of which are Buy rated. As such, Exxon Mobil remains Neutral rated.
Valuation
Exxon shares are trading right around our updated $80 ($79 before), 12-month target price, which is based on cash flow and P/E valuation analyses.
Key risks
Key risks include lower commodity prices and a decline in the broader stock market averages. |
