Barclay’s Capital analyst Paul Cheng this morning upgraded ExxonMobil (XOM) to “Overweight” from “Equalweight” and raised his price target to $92 from $90. Much as Barron’s columnist Andrew Bary argued in a piece in this weekend’s Barron’s magazine, Cheng believes the stock is undervalued relative to peers, trading at just 13.4 times his projected 2010 earnings, assuming a $75 per barrel price for oil next year. However, Cheng believes there could be upside to oil prices based on agreements signed between Exxon and the Iraqi government for development in the country. Cheng sees a “new production cycle” for Exxon given the company reported the first year over year production gain in oil and gas during Q3 since the fourth quarter of 2007. Cheng thinks the stock is underowned by many institutions and they will rotate into it.
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