Is this U.S.-China selloff a buy? A top Wall Street voice weighs in
On Friday, Barclays (LON:BARC) analyst Betty Jiang upgraded California Resources Corporation (NYSE:CRC) stock rating from Equalweight to Overweight and increased the price target to $60.00, up from the previous $50.00. Jiang cited a series of investor meetings with California Resources’ top executives, including CEO Francisco Leon and CFO Clio Crespy, which took place over three days in London and Milan the previous week. The new target aligns with broader analyst sentiment, as InvestingPro data shows analyst targets ranging from $44 to $65, with the stock currently trading at a P/E ratio of 7.05.
The upgrade is based on the positive feedback from European investors and several factors that could potentially enhance the company’s stock value. Jiang pointed out that the regulatory environment for oil and gas operations in California is becoming more favorable, which could lead to growth opportunities for California Resources, particularly in the carbon management business. The company’s strong financial health is evident in its impressive 55.1% gross profit margin and consistent dividend growth, having raised its dividend for four consecutive years.
According to Jiang, the stock is currently trading below the value of its producing upstream assets. The analyst believes that the market has yet to fully recognize the value of the company’s assets, which are characterized by low decline rates and long duration. This view is supported by InvestingPro analysis, which indicates the stock is currently undervalued, with an EV/EBITDA ratio of just 3.42. The upgrade reflects expectations that a more supportive operating environment in California will enable the market to appreciate not only the company’s robust upstream asset base but also the potential value of its unique carbon management business. For deeper insights into CRC’s valuation and growth potential, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro, covering over 1,400 US stocks.
The analyst emphasized that California Resources has multiple idiosyncratic catalysts on the horizon, which could crystallize value for shareholders. This perspective suggests that the company is positioned for potential positive developments that could impact its share price favorably. The company’s strong fundamentals are reflected in its 18% return on equity and moderate debt levels, with a debt-to-equity ratio of 0.31.
Barclays’ new price target of $60.00 represents a significant increase from the previous target and reflects the firm’s confidence in the company’s future performance. The upgrade to Overweight indicates that Barclays now views California Resources shares as a better investment relative to other stocks in the same sector.
In other recent news, California Resources Corporation (CRC) reported strong financial results for the first quarter of 2025, surpassing market expectations. The company achieved an earnings per share (EPS) of $1.07, which exceeded the forecasted $0.8357. CRC’s revenue also outperformed projections, reaching $912 million compared to the expected $862.22 million. These results reflect effective cost management and strategic initiatives by the company. Additionally, CRC announced the launch of California’s first Carbon Capture and Storage project, marking a significant strategic development. The company has also returned $258 million to stakeholders through dividends and buybacks. Analysts have noted CRC’s reaffirmation of its full-year Adjusted EBITDAX guidance of $1.1-1.2 billion, indicating confidence in its financial outlook. Furthermore, CRC’s strategic focus includes expanding its Carbon TerraVault business and exploring Power Purchase Agreements, aiming for sustainable growth.
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