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Exxon Mobil provided an update on its second-quarter outlook on Thursday, and could mean a second-quarter earnings release for the oil giant, according to Cowen & Company.
In its latest 8K presentation, Exxon (ticker: XOM) detailed the continuing headwinds against the Covid-19 pandemic for both upstream and downstream businesses. (Upstream operations refer to exploration and production, and downstream is the refining activity.) The company expects it to lose 43 cents to 95 cents a share in the second quarter; half of that range is a loss of 69 cents, higher than the analyst’s average estimate of 55 cents. The company is expected to report earnings by the end of the month.
“The publication suggests that fears of a very weak quarter will materialize, while the publication alone does not remove the risk of earnings printing due to additional questions about dividend policy and a greater focus on deficiencies,” he writes. Jason Gabelman of Cowen. In other words, the next earnings report can be difficult, not only because of a larger-than-expected loss, but the possibility of more bad news not included in the presentation.
“Furthermore, given the current environment, Exxon is likely to continue to defend its long-term vision of energy growth underpinning its countercyclical capital spending program that could increase next year,” he writes. That means it will be difficult for the company to control its expenses.
Gabelman reiterated a Market Perform rating and a $ 34 price target on the shares. Other analysts have also expressed concern over Exxon’s dividend and cash position.
Still, the market was little concerned about that today. Exxon shares finished 0.9% to $ 44.12 on Thursday, along with the rest of the market in the latest job numbers. However, stocks continue to drop nearly 36% so far this year.
Write to Teresa Rivas at [email protected]
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