Many investors are familiar with price targets, as they represent analysts’ expectations of a stock’s future price.
Of course, analysts interpret many factors, including fundamental and technical, when calculating these levels.
In addition, price targets can be helpful for investors, helping to provide a more structured trade with pre-determined exit levels. However, it’s critical to remember that not all stocks reach analysts’ forecasted levels.
Two stocks – Exxon Mobil XOM and Netflix NFLX – have recently received price target upgrades. Below is a chart illustrating the performance of both stocks in 2023, with the S&P 500 blended in as a benchmark.
Image Source: Zacks Investment Research
As we can see, both stocks have underperformed relative to the S&P 500 in 2023. It raises a valid question – how do they currently stack up? Let’s take a closer look.
Exxon Mobil
Exxon Mobil is a U.S.-based oil and gas entity, one of the world’s largest publicly traded energy companies. Just recently, UBS upgraded XOM shares to Buy from Neutral, with a new $144 per share price target.
The energy titan posted somewhat mixed results in its latest release, exceeding EPS expectations by roughly 2.4% but posting a negative 5.6% revenue surprise.
Still, the company’s revenue growth has undoubtedly been strong amid increased energy prices, as we can see in the chart below.
Image Source: Zacks Investment Research
In addition, Exxon Mobil’s cash-generating abilities have been amplified; XOM generated $17.1 billion in free cash flow throughout its latest quarter, up more than 30% compared to the year-ago quarter.
Image Source: Zacks Investment Research
Netflix
UBS raised its PT for Netflix shares to $390 per share from $350 per share. The streaming titan reported Q1 results yesterday on April 18th; results came in somewhat mixed, with the company posting a modest EPS beat but falling marginally short of revenue expectations. In addition, paid net subscriber adds totaled +1.8 million, well above the year-ago quarter’s results of -200k.
NFLX shares aren’t necessarily cheap, with the company’s 4.3X forward price-to-sales residing on the higher end of the spectrum. Still, on a relative basis, the value is well below the steep 7.6X five-year median and highs of 8.9X in 2022.
Image Source: Zacks Investment Research
The company’s earnings outlook has inched higher across multiple timeframes as of late, indicating bullish sentiment from analysts.
Image Source: Zacks Investment Research
Bottom Line
Price targets are commonly discussed in the market, giving investors a gauge of current sentiment surrounding the stock.
And recently, both stocks above – Exxon Mobil XOM and Netflix NFLX – have received price target upgrades.
As mentioned previously, it’s critical to remember that not all stocks reach analysts’ forecasted levels.
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