ExxonMobil plans to axe up to 300 jobs in Canada by the end of 2021 as the oil major continues to grapple with the impact of the pandemic-led crisis in the energy market.
Exxon (XOM) announced that it will reduce its staffing levels across its Canadian affiliates, including Imperial Oil Limited, ExxonMobil Canada Ltd. and ExxonMobil Business Centre Canada ULC., as part of its ongoing global review to cut costs and improve long-term competitiveness. The company believes that the impact of the COVID-19 pandemic on its products has “increased the urgency of the efficiency work.”
The company stated that it continues to view Canada as an important market. However, it feels the need to take further actions “to improve costs and ensure the corporation and its affiliates manage through these unprecedented market conditions.” Last month, Exxon announced plans to reduce its staffing levels by up to 1,600 positions in Europe and about 1,900 in the US.
Exxon shares have declined 41.5% so far this year as COVID-19 has drastically impacted energy demand and oil prices. The average price target of $40.75 indicates that shares are fully priced at the current levels. Currently, the Street has a Hold analyst consensus on the stock based on 7 Holds, and 1 Sell versus 2 Buys.
In October, Goldman Sachs analyst Neil Mehta upgraded the stock’s rating to Hold from Sell and increased the price target to $36 from $33. The analyst stated, “Since being added to the Americas Sell list on February 3, 2020, shares have underperformed the S&P by 52% on a combination of: (a) weakening oil/refining market fundamentals, (b) concerns about dividend sustainability, (c) higher debt levels, (d) lack of visibility into the multi-year corporate strategy, (e) the repricing of the premium valuation to reflect lower returns and (f) deferral of attractive growth projects reducing the value proposition of owning the stock for some investors.”
Mehta argued that while most of the above concerns are fundamentally justified, they are now “better priced into the share price”. (See XOM stock analysis on TipRanks)
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