Purchase Chevron (NYSE:CVX) and ConocoPhillips (NYSE:COP) however promote ExxonMobil (NYSE:XOM), Goldman Sachs analyst Neil Mehta says forward of the power giants’ upcoming earnings reviews, which he believes will reflect a challenging quarter.
Maybe crucial metric to observe is free money movement, and Mehta expects Chevron and Conoco “may see web debt broadly unchanged at quarter-end, because of capital self-discipline and boosted by asset gross sales closed throughout [Q2], whereas Exxon may see giant debt builds.”
Mehta reiterates Purchase rankings on each Chevron and Conoco, with respective $112 and $56 worth targets, and believes each look properly leveraged to an oil restoration, every time which may be.
As for Exxon, Mehta has a Promote score and $42 worth goal, lowered by $2, seeing the inventory as costly on valuation relative to U.S. majors, with “challenged” free money movement era and dividend protection, and even with the inventory’s YTD decline, he’s too involved concerning the near-term dangers to its restoration to suggest it to discount hunters.
Goldman forecasts Exxon’s debt load will swell to $57B as the corporate depends on borrowed cash to maintain dividend payouts amid detrimental money movement.
Exxon said earlier this week that decrease oil costs will take a $2.1B-$2.5B chunk out of Q2 upstream earnings whereas weaker refining margins will whack downstream earnings by $700M-$900M.