Exxon Mobil Corp’s (XOM) release of its second quarter 2023 Earnings Considerations update implies lower-than-expected 2Q earnings per share (EPS) of $1.95, UBS analysts wrote in a note to clients.
They stated that the biggest negative impacts relative to the first quarter of 2023 are Upstream natural gas prices and Energy Products industry margins, each down $2 billion sequentially and both of which are the biggest negative surprises relative to their estimates.
“XOM has beaten the implied EPS coming off the Earnings Consideration update over the past four quarters, but the direction is negative relative to Street/UBS estimates ($2.19 and $2.27, respectively),” the analysts wrote.
They added that weaker natural gas prices account for a $2 billion sequential decline with the steep decline potentially due to the lag effect on the company's Brent-linked liquefied natural gas (LNG) contracts and/or lower realizations globally.
Analysts at UBS also noted that weaker margins drive the entire decline and, relative to their estimate, they believe international margins were below expectations.
Nevertheless, the analysts have a ‘Buy’ rating and a 12-month target price of $139 on Exxon’s stock.
Shares of Exxon Mobil slipped 3.3% to $103.36 in late-afternoon trading on Thursday but have gained 24% over the past 52 weeks.
Contact Sean at sean@proactiveinvestors.com