Exxon trading at big discount to broader market, Morgan Stanley says in buy rating

Exxon Mobil (New York Stock Exchange: Schwam) +0.5% In Wednesday trading, Morgan Stanley resumes coverage with an Overweight rating and $145 price target, noting the stock trades at a roughly 55% discount to the broader market, nearly double historical levels despite cash flow/equity growth. 50% higher than the Standard & Poor's Index. Double that offered by its energy peers, and a strong shareholder return of up to 7%.

“Exxon's (XOM) scale and integration across energy, chemicals and emerging low-carbon value chains support sustained competitive advantages, above-average growth and a differentiated value proposition within the energy sector and the broader market,” Morgan Stanley analyst Devin McDermott wrote. .

The company's countercyclical growth and cost-cutting strategy boosted earnings by about $14 billion as of the end of 2023 compared to 2019 levels, and looking ahead, McDermott expects earnings to rise by another $14.5 billion over the 2023-2027 period at $60 per barrel of Brent crude. , generating a compound annual growth rate of approximately 20% for cash flow per share and approximately 14% for earnings per share – significantly higher than the S&P 500's average of about 9% and nearly double the average of its energy peers. in the United States.

The analyst adds that Exxon's (