On Thursday, RBC (TSX:RY) Capital maintained its Sector Perform rating on shares of ExxonMobil (NYSE:XOM) with a steady price target of $115.00. The firm's analysis acknowledged ExxonMobil's strategy to continue expanding its operations in the Permian Basin and Guyana, as well as its LNG business. The company's capital expenditure is increasingly directed toward new growth areas.
ExxonMobil's recent update, which was incorporated into RBC Capital's assessment on Wednesday, includes a capex guidance that the firm has used to adjust its estimates. However, RBC Capital's earnings projections, particularly in the refining and chemicals sectors, remain below ExxonMobil's planned figures for the upcoming years.
According to RBC Capital's calculations, ExxonMobil is expected to have a free cash flow (FCF) yield of 5.4% in 2025, which is anticipated to grow to 9% by 2030. Despite this growth, the firm considers ExxonMobil's valuation to be high when compared to its industry peers.
The report concludes that while ExxonMobil is making significant investments in growth, the firm advises investors to exercise caution. This caution is recommended until there is clear evidence of successful delivery on these new initiatives. RBC Capital suggests that there may be more attractive investment opportunities with better risk-reward profiles available in the sector.
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