Goldman downgrades Exxon to 'sell', slashes returns outlook
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MONDAY, AUGUST 15, 2022
Goldman downgrades Exxon to 'sell', slashes returns outlook

World+Biz

Reuters
03 February, 2020, 04:45 pm
Last modified: 03 February, 2020, 04:47 pm

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Goldman downgrades Exxon to 'sell', slashes returns outlook

Reuters
03 February, 2020, 04:45 pm
Last modified: 03 February, 2020, 04:47 pm
The logo of Dow Jones Industrial Average stock market index listed company Goldman Sachs (GS) is seen on the clothing of a trader working at the Goldman Sachs stall on the floor of the New York Stock Exchange, United States, in this April 16, 2012 file photo. REUTERS/Brendan McDermid/File Photo
The logo of Dow Jones Industrial Average stock market index listed company Goldman Sachs (GS) is seen on the clothing of a trader working at the Goldman Sachs stall on the floor of the New York Stock Exchange, United States, in this April 16, 2012 file photo. REUTERS/Brendan McDermid/File Photo

Goldman Sachs downgraded ExxonMobil to "sell" following disappointing fourth-quarter results, as the Wall Street bank forecasted the oil and gas company will meet only half of its targeted returns by 2025.

Irving, Texas-based Exxon's results missed Wall Street's recently lowered estimates, with earnings sliding to $5.6 billion(4.27 billion pounds) from $6 billion a year ago as weak oil and gas prices, sliding refining and chemicals profit margins offset a sharp increase in oil and gas production.

Exxon CEO Darren Woods described the margin weakness as "a short-term impact".

But Goldman said its decision to downgrade Exxon from "neutral" stemmed from "lack of free cashflow limiting capital returns, and risk to long-term return on capital employed (ROCE)targets".

Goldman said it saw "clear downside" to Exxon's target of reaching 15% ROCE by 2025, with its own modelling now showing 8% ROCE due to lower downstream margins, lower crude oil prices and risks to execution of projects.

Goldman lowered Exxon's share price target from $72 to $59. Exxon shares closed at $62.1 on Friday.

 

Global Economy

Goldman Sachs / Exxon Mobil Corp

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