Evercore ISI Downgrades Occidental and Devon, Upgrades Exxon

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Evercore ISI analyst Stephen Richardson has made a series of moves in the firm’s research coverage of the Energy sector.

The analyst upgraded Exxon (NYSE:XOM) to Outperform from In Line with a price target of $120.00 per share, up from $88.00.

“Current valuation is at a >20% discount to historical levels (2011-14 average) while we see returns rising both secularly at the industry level but for XOM specifically. We see industry leading ROCE target of 15% by 2025 and 17% by 2027 @$60 real Brent attainable driving valuation higher,” Richardson told clients in a note.

The analyst also cut the rating on Occidental Petroleum (NYSE:OXY) to In Line from Outperform with a $74.00 per share price target.

“OXY was our ‘go to’ way to play crude oil leverage starting in 4Q21 despite some the risks apparent from the environment… However the market is ever forward looking and here the challenge is discerning to what extent these tailwinds are already reflected in stock’s massive outperformance YTD and whether the upcycle offsets (inflation, US cash tax) have been properly accounted for. We see less differentiation from here and adjust our rating accordingly,” the analyst added.

Finally, Devon (NYSE:DVN) is also cut to In Line with an $80.00 per share price target.

“DVN’s management has proven incredibly consistent and committed to the strategy, and proven the ability to pull more cash out of the business (cost reduction, contingent cash payments on previous divestitures) than anticipated and to reward shareholders accordingly. There is no question on the level of commitment here, just some fundamental headwinds that are likely to slow the upward momentum of the stock,” Richardson told clients in a note.