Exxon Mobil reported quarterly earnings and revenue that beat analysts' expectations, but Raymond James analyst Pavel Molchanov said the oil giant is in an unrecognizable state right now.
"This doesn't look very much like an oil company anymore," Molchanov told CNBC's "Squawk on the Street." "Seventy-four per cent of their earnings came from the chemical segment, which is by far the highest level ever. In upstream … they actually lost money."
"Of course, oil was US$35 (S$40.33) a barrel, so this was a trough quarter, but the reason I've been so negative on the stock is that the company is fundamentally poorly positioned to benefit from an oil recovery."
Molchanov has an "underperform" rating on the stock.
The company posted first-quarter earnings per share of 43 cents, compared to $1.17 a share in the year-earlier period.
Revenue for the quarter came in at US$48.71 billion (S$65.48 billion), against the comparable year-ago figure of US$67.62 billion (S$90.90 billion). Exxon' upstream segment posted a year-over-year loss of US$832 million (S$1.12 billion) for the quarter, while its downstream segment fell US$761 million (S$1023.01 million).
Wall Street expected the oil major to report earnings per share of 31 cents on revenue of $48.14 billion, according to a Thomson Reuters consensus estimates.
"The organisation continues to respond effectively to challenging industry conditions, capturing enhancements to operational performance and creating margin uplift despite low prices," Rex Tillerson, Exxon's chairman and CEO, said in a statement. "The scale and integrated nature of our cash flow provide competitive advantage and support consistent strategy execution."
The company's stock closed up 0.42 per cent.
Exxon shares have bounced back, rising more than 20 per cent since hitting their 2016 intraday low on Jan. 20. The stock is also up more than 13 per cent year to date entering Friday trading.
That said, Standard and Poor's downgraded ExxonMobil's credit rating from AAA to AA+ on Tuesday because of expectations of continuing low oil prices.
In its announcement, S&P said that it expects Exxon's "credit measures, including free operating cash flow (FOCF) to debt and discretionary cash flow (DCF) to debt, will remain below [its] expectations for the 'AAA' rating through 2018." The ratings agency added that its outlook on Exxon is stable.
S&P told CNBC that it has had a AAA rating on Exxon since July 5, 1949. The move leaves only Microsoft and Johnson & Johnson with AAA ratings from S&P.
On Tuesday, BP, another major oil company, reported quarterly results well-above expectations.Nonetheless, S&P Global Market Intelligence said in a note to clients Wednesday it expects energy-sector earnings to have fallen more than 100 per cent last quarter.
- CNBC's Christine Wang contributed to this report.