It’s been a great day for Pioneer Natural Resources (NYSE:PXD) as it shot up over 11% in Friday afternoon’s trading session. Analysts came out in force to discuss the potential deal between itself and oil stock Exxon Mobil (NYSE:XOM), and the commentary generally seemed to make the deal look smarter by the minute.
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TD Cowen analysts noted that Exxon was likely to fund the roughly $60 billion deal with mostly equity, especially given the rapidly expanding costs of debt. With interest rates higher than they’ve been in some time and the Fed putting out a nigh-constant drumbeat of “higher-for-longer,” looking for Exxon to finance a deal on the strength of its surging profits and growing cash stock makes some sense. Meanwhile, Spencer Jakob of The Wall Street Journal’s “Heard on the Street” noted that Exxon’s planned purchase price would represent only an approximate 6.5x EBITDA payout.
Further, word out of Goldman Sachs suggests that Exxon is pursuing a new status as “top of the pack,” particularly wherever it happens to operate. It’s thus going hard for the Permian Basin, and with Exxon poised to buy Pioneer, it would land significant new opportunities in that region and bolster Exxon’s productivity therein to the point where it would more than double. Exxon is the fifth-largest operation in the Permian Basin right now, with 6% of the gross, but Pioneer is the largest at 9%. The combination, meanwhile, would make Exxon far and away the biggest.
Is Pioneer Natural Resources Stock a Good Buy?
Analysts are somewhat mixed on Pioneer’s long-term outlook, though. Currently, Pioneer Natural Resources stock is considered a Moderate Buy, supported by eight Buy ratings, 11 Holds, and two Sells. Further, with an average price target of $260.68 per share, Pioneer Natural Resources stock offers investors 9.43% upside potential.
