Exxon Mobil upgraded, BP downgraded at Scotiabank
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Exxon Mobil (NYSE:XOM) on Thursday was upgraded to Sector Outperform from a previous investment rating of Sector Perform by analysts at financial-services firm Scotiabank. In their review of large-cap energy companies, they also downgraded BP to Sector Perform from Sector Outperform previously.
Exxon Mobil upgrade
Exxon Mobil is a more defensive energy stock amid the outlook for swings in oil prices, according to Scotiabank.
“Although it is not a cheap stock in a traditional sense versus the other supermajors, we think the market will continue to pay up for the premium given the uncertainty and risk in the oil market,” Paul Cheng, analyst at Scotiabank, said in an October 10 report. “In addition, we believe ExxonMobil’s (XOM) upstream portfolio currently ranks the strongest among the supermajors, particularly following their acquisition of Pioneer Natural Resources.”
BP downgrade
BP faces possible strains on its balance sheet with lower oil prices and its commitment to buy back $7 billion in stock in 2025, according to Scotiabank.
“Compared to the other supermajors, BP’s (BP) balance sheet is not as strong. In addition, in view of the potential oversupply in the global liquefied natural gas market between 2026 and 2028, BP’s (BP) trading performance may not be able to repeat their robust 2023 level, and relative to their peers, trading represents a larger contributor to their bottom line.”