Exxon Mobil (NYSE:XOM) is a go-to stock for investors seeking exposure to the energy sector, and the company didn’t disappoint either. XOM stock gained about 175% in three years, outperforming the S&P 500 Index (SPX), which increased by about 42% during the same period. After stellar growth over the past three years, the company has its sights set on lithium, a core component for EV (Electric Vehicle) batteries.
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According to a Wall Street Journal report, XOM acquired drilling rights to a substantial piece of land in Arkansas to produce Lithium.
Exxon reportedly spent over $100 million to buy 120K gross acres in the Smackover formation of southern Arkansas from Galvanic Energy, an exploration company.
Considering XOM’s size and scale, the investment amount is small. However, it shows the company’s intent to gain a foothold in future energy sources, as the region is believed to have huge lithium reserves. Moreover, the move will likely diversify XOM’s revenue base.
XOM stock benefitted significantly from the recovery in crude oil prices following the COVID-led slump. Further, barring short-term economic challenges, the long-term demand for energy remains strong, which will likely support XOM stock.
While Exxon is well-positioned to capitalize on long-term energy demand, Goldman Sachs downgraded XOM stock to Hold from Buy on May 1.
Goldman Sachs analyst Michele Della Vigna finds XOM’s valuation less compelling after its multi-year outperformance. Furthermore, the analyst sees the benefits from tailwinds like refining margins and chemicals abating for XOM.
What’s the Prediction for XOM Stock?
While Goldman Sachs downgraded XOM stock, it sports a Moderate Buy consensus rating on TipRanks. It has received 10 Buy and four Hold recommendations. Meanwhile, analysts’ average price target of $129.54 implies 21.91% upside potential from current levels.
