Exxon Mobil profits will likely miss fourth-quarter-earnings estimates by close to 20%, one analyst argued as he trimmed his numbers.
While Exxon Mobil expects changes in gas prices to improve earnings by up to $400 million, the global energy company anticipates losses in other segments, according to a regulatory form the company filed with the U.S. Securities and Exchange Commission.
Mizuho analyst Nitin Kumar noted that a weakness in upstream liquids pricing, energy products margins, and chemicals margins “appear to be weighing on results.”
Exxon expects lower liquids prices to reduce upstream earnings by $500 million to $900 million from the third quarter. Exxon reported net income of $8.6 billion in the third quarter, with $6.2 billion attributed to upstream activity.
The midpoint of Exxon’s implied fourth-quarter earnings-per-share range of $1.03 to $1.88 is 18% below Mizuho’s prior estimate of $1.79, and 17% below Wall Street’s consensus of $1.76, Kumar wrote.
The firm cut its fourth-quarter earnings-per-share estimate to $1.55, while reiterating a Neutral rating on Exxon stock with a price target of $134.
UBS analysts led by Josh Silverstein noted that Exxon’s 8-K form “does not include impacts from factors that have historically benefited XOM,” such as growing upstream volumes, ongoing cost reduction efforts, and a shift toward higher-value downstream products.
These elements could provide upside versus the implied earnings per share, UBS wrote.
UBS maintains a Buy rating on Exxon stock with a price target of $147. Like Mizuho, UBS anticipates fourth-quarter earnings per share of $1.79, but may review the estimate following upcoming discussions with the energy company.
Exxon shares were down 1.6% to $106.97 on Wednesday. Chevron stock was flat, while U.S.-listed shares of Shell and BP were down 2.5% and 1.9%, respectively.