Exxon Mobil shares are down 40% YTD. Should I invest?

By: Stanko Iliev
Stanko Iliev
Stanko dedicates himself to providing investors with relevant information they can use to make investment decisions. He loves the… read more.
on Dec 26, 2020
  • Goldman Sachs and Wells Fargo upgraded their price target on Exxon Mobil this December
  • If the price jumps above $45, the next target could be around $50
  • Exxon Mobil will reduce 15% of the global workforce by the end of 2021

Exxon Mobil (NYSE: XOM) shares have weakened from $70 below $33 since the beginning of January, and the current price stands around $41.60. Goldman Sachs increased its price target to $52 on Exxon Mobil this December, and despite the challenging pandemic environment, the dividend remains safe.

Fundamental analysis: The dividend remains safe

Exxon Mobil is an American multinational oil and gas corporation headquartered in Texas. Exxon Mobil shares could be a very good investment option, and most financial analysts are also expecting its price to rise considerably in the next several years.

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In the time of the pandemic uncertainty, Exxon Mobil has reported lighter than expected Q3 loss. Total revenue has decreased -29.0% Y/Y in Q3 to $46.2B while Q3 GAAP EPS was -$0.15 (beats by $0.11).

The company announced that it would reduce its capital spending plans for next year and stay at $16B-$19B. Exxon Mobil will reduce 15% of the global workforce by the end of 2021, which will help rebuild balance sheet capacity to manage future commodity price cycles while maintaining a reliable dividend.

“Recent exploration success and reductions in development costs of strategic investments have further enhanced the value of our industry-leading investment portfolio … Continued emphasis on high-grading the asset base – through exploration, divestment, and prioritization of advantaged development opportunities – will improve earnings power and cash generation, and rebuild balance sheet capacity to manage future commodity price cycles while working to maintain a reliable dividend,” said CEO Darren Woods.

Exxon Mobil is a stable company with a good position in the market, and at the current stock price, this company is not overvalued. The fundamentals of this company are very good; the company will not face cash flow problems, EBITDA is above $18B, and the dividend remains safe.

Goldman Sachs increased its price target to $52 on Exxon Mobil this December and said that this company has a positive risk/reward profile.

Technical analysis: The first sign of the trend reversal will be if the price jumps above the $50 resistance

Technically looking, Exxon Mobil shares remain in the bear market, and the first sign of the trend reversal will be if the price jumps above $50 resistance. If the price falls in the upcoming period, every price in a range from $30 – $35 could be a good opportunity to invest in Exxon Mobil shares.

Data source: tradingview.com

The critical support levels are $40 and $35; $45 and $50 represent the resistance levels. If the price jumps above $45, it would be a signal to buy Exxon Mobil shares, and the next target could be around $50, but if the price falls below the $40 support level, it would be a firm “sell” signal.

Summary

Exxon Mobil is a stable company with a good position in the market, and at the current stock price, this company is not overvalued. The company is moving in the right direction, and the positive news is that Goldman Sachs and Wells Fargo upgraded their price target on Exxon Mobil this December.

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