2024 was a difficult year for energy companies, especially. With the growing geo-political tensions mounting around the globe and tightening regulations from governments aspiring to change the energy landscape, moving towards cleaner energy, traditional energy companies such as Exxon (XOM) have had to adapt to an evolving industry and pressures from climate activists like never before.
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However, Exxon has seen most of these during its 142-year lifespan to date, so it knows what it has to do to navigate these troubling times. Now, it seems XOM’s fortunes might alter again. But for the better, with President-elect Donald Trump, he is set to re-enter the White House.
If you wish to read more on XOM, you can read what our analyst at Tipranks, Nikolaos Sismanis, had to say about the stock.
Let’s explore three reasons why Exxon is forecasted to enjoy 2025 more than it did in 2024.
- Free Cash Flow Despite Challenges: Exxon Mobil has faced significant headwinds due to weak oil prices and tightening margins. However, the company remains a free cash-flow titan. In Q3, Exxon reported earnings of $8.6 billion and an impressive free cash flow of $11.3 billion, bringing the year-to-date total to $26.4 billion. Analysts project free cash flow to exceed $30 billion annually in the near term, potentially reaching $38 billion by 2026. This strong cash flow and improved product yields have positioned Exxon well for a stronger year than in 2024.
- Anticipated Deregulation Under Trump: The anticipated deregulation under President-elect Trump could be a game-changer for Exxon Mobil. Trump’s administration is expected to ease restrictions on drilling in federal lands and waters and reduce emissions-related regulations, if not cancel them altogether. These changes would lower costs and enhance operational flexibility, boosting Exxon’s margins and supporting its growth plans. With a favorable regulatory environment, Exxon can leverage its expertise in upstream operations more effectively, particularly in profitable regions like the Permian Basin and Guyana.
- Navigating ESG Pressures: The House Judiciary Committee accused financial firms and climate activists of colluding to impose extreme ESG goals on U.S. companies, specifically targeting Exxon Mobil’s board in 2021, after the company refused to meet climate demands. Despite these challenges, Exxon plans to boost oil and gas production to 1970s levels by 2030 while investing $30 billion in low-carbon projects. The company’s techniques, such as 4-mile horizontal laterals and cube drilling, aim to maximize resource recovery while minimizing environmental effects. There’s little doubt Exxon has been showing its resilience and know-how approach during ESG pressures, which forced it to replace board members after refusing to meet some of the ESG demands.
Is Exxon a Buy, Sell, or a Hold?
On Wall Street, Exxon Mobil is a Moderate Buy. The average price target is $131.20, implying a 23.31% upside potential.
Takeaway
As a veteran of Wall Street, Exxon Mobil has seen most of what the market has to offer and most of the geopolitical challenges the world and governments can present. 2024 has not been one of the most flourishing in recent memories, but that hasn’t stopped XOM from solidifying its free cash flow while enduring a slight dip in revenue from last year’s period. Its fortunes are expected to change for the better with President-elect Trump set to re-take the Oval Office and ease down on energy regulations. In conclusion, for a company that is celebrating its 143rd birthday in 2025, the company looks like a young entity, filled with energy and ready to make the most out of Trump’s presidency.
