- Exxon Mobil (XOM -1.3%) opens lower and could be headed for a fifth straight loss, as RBC Capital cuts its stock price target to $85 price $90 on concerns over the potential for future share buybacks.
- RBC says while XOM's dividend yield vs. the market appears attractive relative to history, this notion fails to recognize that share buybacks have been a core part of the stock's historical investment case, and the firm sees limited scope for the company to raise the share buyback program materially going forward, with surplus cash likely to be utilized in asset acquisitions.
- XOM's cash generation has improved over the past year but performance has not been synonymous with a sector leading valuation, the firm says, and while cash generation should continue to improve, it may lag key peer Royal Dutch Shell (LON:RDSa) out to 2020.
- "On an all-in basis, we see Exxon trading in line with the market, and thus materially less attractive than in prior years," says RBC, which rates XOM at Sector Perform.
- Now read: ExxonMobil And An Increasingly Strong Dividend
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