UBS cuts Occidental Petroleum price target to $38 from $44

Published 16/04/2025, 15:42
UBS cuts Occidental Petroleum price target to $38 from $44

On Wednesday, UBS analyst Josh Silverstein revised the price target for Occidental Petroleum (NYSE:OXY) shares, lowering it to $38.00 from the previous $44.00, while maintaining a Neutral rating on the stock. According to InvestingPro data, the stock appears undervalued despite falling significantly over the last three months. Silverstein’s assessment comes as investors anticipate the company’s first-quarter results for 2025, scheduled for May 7.

In his commentary, Silverstein mentioned that he expects Occidental Petroleum’s operations in the Permian Basin to continue performing strongly, with production volumes likely at the higher end of the company’s guidance. Additionally, the Midstream gas optimization unit could benefit from increased spreads observed in March.

The analyst also pointed out concerns regarding Occidental’s cash generation capabilities. Factors such as debt reduction requirements, preferred dividends, and approximately $1.6 billion in non-oil and gas capital expenditures could potentially impact the company’s financial outlook. Silverstein suggests that the market will be looking for indications of whether Occidental Petroleum might reduce its activity levels as a result.

While acknowledging that it might be premature for the company to decrease spending due to the potential long-term margin impacts of reduced activity, Silverstein indicated that the risks appear to lean towards the downside. Investors and analysts alike will be closely monitoring Occidental’s upcoming quarterly report for further insights into the company’s financial strategies and operational adjustments. The company maintains a P/E ratio of 16.04x and has impressively maintained dividend payments for 52 consecutive years.

In other recent news, Occidental Petroleum has been in the spotlight due to several key developments. The company has preannounced its realizations for the first quarter of 2025, highlighting factors that may influence its financial results, as detailed in a recent SEC filing. Additionally, Occidental, along with its subsidiary 1PointFive, has received Class VI permits from the U.S. Environmental Protection Agency for its Direct Air Capture project in Texas, marking a significant step in carbon capture technology. On the financial front, analysts have adjusted their outlooks on Occidental Petroleum. Stephens has lowered its price target to $58 while maintaining an Overweight rating, noting cash flow and EBITDA estimates that slightly exceed consensus. Mizuho (NYSE:MFG) Securities also reduced its target to $62, maintaining a Neutral stance, and pointed out a potential shortfall in EBITDA. TD Cowen, however, downgraded the stock from Buy to Hold, slashing the price target to $45 due to market volatility and a preference for gas-weighted equities. These revisions reflect the varying assessments of Occidental’s capacity to navigate current economic challenges.

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