(By Balachander) Exxon Mobil Corp. (NYSE:XOM) shares were downgraded to "Neutral" from "Buy" by UBS Securities analyst William Featherston, who maintained price target of $90.
Featherston said the company is trading at relative P/E above its 5-yr historical avg and above avg premium to peers and also cited continued disappointing production trends for the rating change.
Other reasons for the downgrade include the risk of reducing pace of share repurchases from 2012's $20bn; earnings quality increasingly polluted by gains on asset sales; and material outperformance since the September 2011 energy lows vs peers (1,400 bps) and S&P 500 (400 bps), the analyst wrote.
The analyst lowered his 2012-13 production growth forecasts to -4.8 percent/1.3 percent from -3.9 percent/1.8 percent. He also reduced 2012 EPS estimate to $7.69 from $7.87 and 2013 EPS estimate to $7.71 from $7.99.
Featherston wrote XOM is trading at a premium to its historical relative PE and EV/DACF multiples, while most other stocks in our coverage are trading at a discount to historical multiples.
Irving, Texas-based Exxon Mobil is engaged in the exploration and production of crude oil and natural gas, and manufacture of petroleum products, as well as transportation and sale of crude oil, natural gas, and petroleum products.
XOM shares added 0.21 percent to trade at $86.70 on Friday. Over the past year, shares have been trading in the range of $67.03 to $87.94.