(This story is for CNBC Pro subscribers only). Exxon Mobil is poised to reverse several years of underperformance and deliver big returns in both dividends and rising stock prices in 2021, according to Morgan Stanley. The firm upgraded the stock to overweight from equal weight and named Exxon its top pick in the integrated oils group, saying that the expected economic recovery should boost the company's performance across the board. "A tightening global oil market, rebounding global gas prices, forward crack spreads that have begun to rally, and an improving chemicals outlook supports margins moving back within historical ranges for all of XOM's core business units," the note said. One big benefit for Exxon is its dividend, with a yield that currently sits at nearly 8%. The company's recent cost cuts should lower concern of the need for a dividend cut, according to the note. Morgan Stanley estimated that Exxon needs European benchmark Brent crude to average $49 per barrel over the next five years to cover its dividend and capital expenditures, which the rebounding commodity has already surpassed . Morgan Stanley's price target of $57 per share is 25% above where Exxon's shares closed on Friday and would represent a total return of 33% for the year when including the dividend. Exxon's stock struggled in 2020 like the rest of the oil industry, but its underperformance is a multiyear story. Its shares are down 35% over the past 12 months and 49% since the start of 2017. The firm's call on Exxon is part of becoming more bullish on the oil industry more broadly. Morgan Stanley upgraded its outlook on integrated oil to attractive from in-line and kept its overweight rating on Chevron . "While the demand recovery likely remains choppy due to high product inventories, low jet fuel demand, and the re-introduction of lock downs, we believe the Energy sector is poised to benefit disproportionately from the reopening as demand for travel returns," the note said.
A pigeon flies over a Exxon mobil gas station on October 25, 2018 in Gutenberg New Jersey.
Kena Betancur | Corbis News | Getty Images
(This story is f