- Saying there may be "some smoke but likely no fire," Wells Fargo analysts rate the likelihood of a negative outcome from a reported SEC investigation into ExxonMobil’s (XOM -0.1%) accounting and climate practices as very slight.
- XOM has long been conservative on when and how much is capitalized, and its returns on capital employed have consistently outperformed its peers, which is a harder performance to deliver without write-downs, Wells says.
- But the firm sees the headline risks associated with the SEC probe creating enough investor angst to damage XOM’s reputation and impact its share price performance during the investigation period; while maintaining its Outperform rating, Wells cuts its valuation range on the shares to $93-$103 from $103-$114.