- Exxon Mobil (XOM +2.3%) surges in early trading after RBC Capital upgrades shares to Outperform from Sector Perform with a $100 price target, up from $90, citing strong capital returns including share buybacks and dividends.
- "A combination of disappointing results and the acceleration of its investment plans has led Exxon to underperform peers significantly recently," RBC analyst Biraj Borkhataria writes. "From now to 2025, we see the potential for substantial dividend growth alongside superior returns, both of which appear underappreciated to us."
- The firm also says XOM "has historically been one of the most successful super-majors at investing through the business cycle and taking advantage of downturns by lowering its cost structure and high-grading its asset base."
- Borkhataria predicts XOM will raise its dividend by 4% in 2019 and then 5%/year starting in 2020, and expects XOM's share buybacks to rise materially after 2020.
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