Exxon can rally almost 50%, according to Bank of America

Published Mon, Dec 2 20199:39 AM EST

Exxon Mobil looks poised for a nearly 50% rally, Bank of America said on Monday as the firm named the company its top U.S. oil major pick for 2020. Successful project execution and accelerating momentum will push the stock to $100, in what "could (finally) be ExxonMobil's year." After years of lackluster performance in 2018, Exxon announced plans to double its annual earnings by 2025 , and over the next year Bank of America anticipates "momentum building behind several key drivers." The firm's analysts, led by Doug Leggate, pointed to investments in projects in the Permian Basin and Guyana, among other things, as the key drivers. The heavy capital spending is beginning to pay off, which Bank of America said "should address market skepticism on whether it can translate to meaningful outperformance vs peers." The firm has a buy rating and $100 target on the stock, which is about 47% above where Exxon currently trades. The energy sector's decline has been well documented as falling oil prices have pressured companies' bottom line. It's by far the worst performing S & P sector over the past year — falling 11% while the second-worst performer, health care , has gained 5%. And Exxon has lagged the benchmark, shedding 14% over the last year. The company's most recent quarterly report showed a 49% year-over-year decline in earnings as oil prices fell and operating costs rose. But Leggate said that the company's years of investment make it better positioned than its peers going forward. "Exxon is increasingly differentiated by successful project execution ... We continue to believe a strategy of investing counter to the broader industry investment cycle is reloading growth opportunities at advantaged costs and unlike most peers, creates capacity for ratable dividend growth," he said. Exxon currently pays a dividend of 5.11%. Leggate also said that Exxon's decision to focus on capital expenditures as a way to drive future cash flow makes the company a better buy relative to its peers, which have instead focused on short-term boosts like buybacks. Shares of Exxon were modestly higher in Monday's trading session. - CNBC's Michael Bloom contributed reporting.

Exxon Mobil looks poised for a nearly 50% rally, Bank of America said on Monday as the firm named the company its top U.S. oil major pick for 2020.

Successful project execution and accelerating momentum will push the stock to $100, in what "could (finally) be ExxonMobil's year."