What Next For Exxon Mobil Corporation (XOM), United States Oil Fund LP (ETF) (USO), PetSmart, Inc. (PETM)?
New York, NY – GDP INSIDER – 12/15/2014.
Exxon Mobil Corporation (NYSE:XOM) shares have been upgraded to Market Perform by BMO Capital Markets from Underperform rating assigned by it earlier. The brokerage also increased its price objective to $95 from $85 on Exxon Mobile shares.
BMO Capital said that the shares of the company were looking expensive compared to rivals. However, its defensive nature would put the stock on a weak note mostly next year has driven it to lift the rating of the shares.
The brokerage does not expect any change in Organization of Petroleum Exporting Countries stand on slashing production to defend oil price. BMO Capital said that it would take some time for OPEC to respond to the reality and reduced its oil price predictions to $67 a barrel.
United States Oil Fund LP (ETF) (NYSEARCA:USO) is exposed to future-based oil price. Currently, 47.44% of its asset is from future contract on WTI crude future while 52.56% is being held as cash. Its assets under management were worth around $865.64 million.
The ETF has been functioning poorly in the last five-year period with a negative return of 38.19%. In current year, the fund delivered a negative return of 37.91% while the 26-week return was a negative 43.94%. In the last one month alone, the fund shed 23.9%.
The primary factor for the poor performance was the steep drop in oil price, which is trading below the five-year period. The chances of the oil price staging a comeback looked remote with OPEC refusing to slash production of oil to defend oil price.
PetSmart, Inc. (NASDAQ:PETM) disclosed that it struck a definitive deal to be acquired by a group headed by BC Partners, Inc. The group would pay $83.00 a share in cash to PetSmart shareholders, indicating 39% premium from July 2 price. Effectively, the deal was valued around $8.7 billion.
PetSmart, Inc. (NASDAQ:PETM) said that the consortium has got a commitment of debt financing in relation to the deal. The company indicated that the transaction would close in the first half of the next year. The acquisition announcement came after a thorough review of tactical alternatives undertaken by the company’s Board to optimize the value of its shareholders that started during the summer.
Longview Asset Management, which has approximately 9% holding in PetSmart, has committed to back the transaction.
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