Exxon Mobil's Earnings Warning Shouldn't Worry Investors

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published 8 January 2025

Exxon Mobil (XOM) fell out of the gate Wednesday after the energy giant warned investors that lower oil prices and refining margins will impact its fourth-quarter earnings, which will be released later this month.

In an 8-K filing with the Securities and Exchange Commission (SEC), Exxon Mobil said that it expects upstream earnings to decline by $500 million to $900 million from the third quarter due to declining liquid prices, according to MarketWatch.

Additionally, lower margins are expected to reduce its energy products earnings by $300 million to $700 million and its chemical products earnings by $300 million to $500 million.

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One positive is in its upstream segment, where higher gasoline prices are expected to increase earnings by up to $400 million.

Mizuho analyst Nitin Kumar responded by lowering his fourth-quarter earnings-per-share (EPS) forecast by 13% to $1.55. The analyst has a Neutral (Hold) rating on the energy stock.

MarketWatch noted that Exxon's warning came just a day after oil and gas company Shell (SHEL) gave a similar outlook in a 6-K filing.

Exxon said it expects to report its fourth-quarter earnings before the market opens on Friday, January 31.

Is Exxon Mobil stock a buy, sell or hold?

Exxon Mobil has lagged the broader market over the past 12 months, up 9.6% on a total return basis (price change plus dividends) vs the S&P 500's 27.5% gain. Yet, Wall Street remains bullish on the top dividend stock.

According to S&P Global Market Intelligence, the average analyst target price for XOM stock is $129.94, representing implied upside of about 21% to current levels. Meanwhile, the consensus recommendation is Buy.

Financial services firm UBS Global Research is one of the more bullish outfits on the blue chip stock with a Buy rating and a $147 price target.

In a note following the release of Exxon's 8-K filing, UBS Global Research analyst Josh Silverstein noted that the filing did "not include impacts from factors that have historically benefited XOM, including its growing Upstream volumes, ongoing cost reduction efforts, and its shift towards higher-value Downstream products."

However, he added that his firm may review its estimates following a discussion with Exxon.

Joey Solitro is a freelance financial journalist at Kiplinger with more than a decade of experience. A longtime equity analyst, Joey has covered a range of industries for media outlets including The Motley Fool, Seeking Alpha, Market Realist, and TipRanks. Joey holds a bachelor's degree in business administration.