Exxon Mobil doesn't plan to cut its natural gas spending, meaning reduced cash flow and limited upside for the stock, Cowen told its clients.
Exxon Mobil doesn't plan to cut its natural gas spending any time soon, meaning reduced cash flow and limited upside to the stock over the next 12 months, Cowen told its clients Friday.
"Exxon Mobil's counter-cyclical investment decision may look prescient in future years, but we do not believe the investor community is willing to place that same bet today and are downgrading the stock as a result," Gabelman wrote in a note. The analyst also cut his 12-month price target to $75 from $100, a 25 percent reduction that implies the stock will fall 6 percent over the next year.
Exxon expects its capital spending to grow by $4 billion this year, to $30 billion. Next year, the company expects to spend $33 billion to $35 billion, and $30 billion to $35 billion in the following years through 2025.
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