Exxon Mobil Braced for Q2 Headwinds in Trading Update, Stock Dips (XOM)

Exxon Mobil (NYSE: XOM) heads into its second-quarter 2025 earnings release on August 1st with a trading update that indicates expected dips in key areas. The energy giant announced that fluctuating commodity prices, specifically in liquids (oil) and natural gas, are expected to negatively impact Q2 results compared to the robust performance seen in Q1.

According to a regulatory filing, the company anticipates a $1.2 billion to $0.8 billion hit to earnings due to changes in oil prices, and a further $0.7 billion to $0.3 billion reduction stemming from shifts in gas prices.

Exxon's stock closed yesterday at $111.11, reflecting a 0.97% drop on the day. XOM has struggled to build momentum this year, largely trading in a range.

Despite the anticipated Q2 headwinds, Exxon Mobil's Q1 2025 performance provides a solid foundation. The company reported earnings of $7.7 billion, a 4% sequential increase, with an EPS of $1.76, exceeding analyst expectations. Revenue for the quarter stood at $83.13 billion, and the company maintains a dividend of $3.96 per share, yielding 3.63%.

However, the path forward is not without its obstacles. Exxon Mobil faces ongoing legal challenges related to environmental concerns. A climate liability lawsuit filed by the City of Boulder and Boulder County, seeking compensation for climate change impacts, has been allowed to proceed in state court.

Additionally, a Pennsylvania jury found Exxon Mobil liable for failing to warn about the health risks of benzene exposure, ordering the company to pay $725.5 million in compensatory damages. These legal battles add another layer of complexity to the company's outlook, potentially impacting its financial resources and reputation.

Looking ahead, analysts maintain a “Buy” consensus rating for Exxon Mobil, with an average target price of $124.06, implying a potential upside of approximately 13.5% from current levels. The 2025 earnings growth estimate projects an increase in EPS from $7.43 to $9.02 per share.

With the full Q2 print less than a month away, this latest update has set the stage for what could be a more difficult quarter. Bulls will be looking for a positive outlook and guidance to help set up the second half of the year.