Earnings Preview - International oil prices drive Exxon Mobil (XOM.US) stock price soaring. Can the performance "add fire to the rally?"

U.S. oil and gas giant Exxon Mobil (XOM.US) will announce its results for the first quarter of 2024 as of March before the U.S. stock market opens on April 26, Eastern Time. It is expected that the company's total revenue and earnings per share may show Down. Analyst expectations data compiled by Zacks Consensus Estimates show that analysts expect the oil and gas giant to report quarterly earnings of $2.19 per share in the upcoming report, which would be a year-over-year decrease of 22.6%; total revenue is expected to be approximately $810 billion, compared with approximately US$86.565 billion in the same period last year.

It is worth noting that the increasingly tense geopolitical situation in the Middle East has recently continued to push up international crude oil prices, which in turn has prompted global funds to flow into oil and gas giants such as Exxon Mobil that benefit from high oil prices. Investors continue to pay attention to tensions in the region, mainly because Iran is OPEC's third largest crude oil producer, and most of its crude oil is exported to China and other Asian demand countries. After the Iranian embassy in Syria was attacked by Israel, there seems to be a powder keg in the Middle East. It may be fully ignited. If Iran formally declares war on Israel, it may cause Iran to urgently suspend crude oil exports to maintain its war industrial needs. At that time, international oil prices may further surge.

Charu Chanana, a strategist at Saxo Capital Markets Pte, said: "The Fed continues to become increasingly hawkish by the day, while the outlook so far from the AI-related semiconductor giants has been completely inadequate. To offset the market's risk aversion, rising geopolitical concerns are also clouding the outlook for the stock market."

UBS, a major international bank, recently raised its crude oil price forecast by US$5/barrel. The bank predicts that the price range of Brent crude oil, the international crude oil benchmark, will be between US$85 and US$95/barrel in the next few months. North American crude oil pricing benchmark - WTI crude oil price range will be between 80 and 90 US dollars / barrel. In the report, UBS also raised its global demand growth forecast for this year and lowered its crude oil production forecast for the second quarter of 2024 for OPEC+ countries.

Due to rising geopolitical risks, analysts at Wall Street bank Morgan Stanley recently raised their Brent crude oil price forecast for the second quarter of this year by US$4.50/barrel to US$92/barrel, and lowered their Brent crude oil price forecast for the third quarter. The price is raised by US$4/barrel to US$94/barrel. Bank of America's global research team predicts that the average prices of Brent crude oil and WTI crude oil this year will be US$86/barrel and US$81/barrel respectively, with their peaks in the summer being around US$95/barrel. As of press time, Brent crude oil futures prices were hovering around $86, up 14% this year.

Alexandra Wilson-Elizondo, co-chief investment officer of Goldman Sachs' multi-asset solutions, recently said that the company believes that technology stocks will be under pressure and is optimistic about areas such as energy and Japanese stock markets. Wilson-Elizondo said Goldman Sachs Asset Management has recently increased its holdings in energy stocks to hedge against inflation and geopolitical risks. Data shows that ExxonMobil's share price has risen by as much as 20% this year. This increase far exceeds the only 4% increase in the US stock benchmark index - the S&P 500 index, and also exceeds the US stock energy sector ETF (XLE.US) by as much as 14%. increase.

In the past 30 days, analysts have intensively raised their first-quarter earnings per share estimates by about 10% to reach current levels. This essentially reflects how the analysts covered by Zacks have collectively re-evaluated their preliminary estimates during this time.

In its last quarterly performance report, ExxonMobil expected earnings per share of US$2.21, while actual earnings per share were US$2.48, surprisingly exceeding expectations by 12.22% against the backdrop of weak oil prices. The company's earnings per share far exceeded analysts' consensus estimates in two of the last four quarters.