Exxon gets $180 target despite outages, AI push fuels optimism

RBC Capital has reaffirmed its "Sector Perform" rating on ExxonMobil stock, setting a price target of $180.00, according to an Investing.com report.

The oil giant, which currently boasts a market capitalisation of $637 billion, was last at $154.88.

Based on InvestingPro's Fair Value assessment, the stock is currently deemed undervalued.

According to a different report by Yahoo Finance, the analyst's fair value estimate for ExxonMobil has been slightly increased, rising from $164.13 to $165.64 per share.

This shift is driven by a slightly more constructive, though still mixed, analyst view.

These updated perspectives, which cluster around new oil price assumptions, cash flow expectations, and opinions on whether the current valuation already accounts for a supportive environment, have resulted in a range of new price targets, both higher and lower, according to the report.

Analyst ratings and operational headwinds

Meanwhile, RBC Capital said that Exxon’s first-quarter results were affected by significant timing impacts.

However, underlying results suggest that ExxonMobil remains a likely net beneficiary of the robust commodity price environment, even with operational outages in the Middle East.

RBC Capital has lowered its estimates for Exxon, anticipating a full outage throughout the second quarter, followed by a gradual recovery.

This revision reflects the expectation of prolonged operational downtime.

However, despite these immediate setbacks, Exxon demonstrates strong financial stability, evidenced by 43 consecutive years of dividend increases and a current yield of 2.68%, according to InvestingPro data.

RBC Capital maintained its Sector Perform rating and $180.00 price target for the stock, despite having adjusted its financial projections.

ExxonMobil is an integrated oil and gas company, and its operations encompass exploration, production, refining, and the chemicals sector.

Higher assumed oil prices and strong cash flow potential have led several firms to raise their price targets for Exxon Mobil recently.

For instance, Piper Sandler increased its target to $186, Wells Fargo to $183, and Mizuho to $162.

Bullish research from firms like Wells Fargo and Piper Sandler suggested that expectations of sustained capital returns and tighter crude balances within their supply and demand models are driving higher valuation frameworks.

Technology and global exploration focus

ExxonMobil's vice president of exploration, John Ardill, announced on Tuesday that the company is leveraging artificial intelligence and cutting-edge technology.

This enables them to interpret seismic data from Guyana in a matter of days, a significant reduction from the months it previously took.

At the Offshore Technology Conference in Houston, Ardill stated that high-performance computing and AI-driven algorithms have sped up the process of seismic imaging.

Exxon Mobil heads the consortium managing all crude oil and gas production in the South American country.

This consortium has successfully increased output capacity to over 900,000 barrels per day in the six years since crude production began there.

The company has also leveraged new global technologies to reassess oil prospects that were previously deemed uneconomic, according to Ardill.

He noted that future exploration will increasingly target areas once too challenging to develop, which are now becoming viable due to technological advancements.

Exxon anticipates finishing seismic acquisition in its offshore block in Trinidad and Tobago, which is adjacent to Guyana, by the end of the year.

The company will then rapidly evaluate the block, whose geology is expected to be similar to either Guyana or Angola.

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