On Monday, Mizuho Securities adjusted its outlook on Occidental Petroleum (NYSE:OXY) shares, reducing the price target from the previous $68.00 to $62.00, while maintaining a Neutral stance on the stock. The firm anticipates a roughly 7% shortfall in Occidental’s EBITDA, which currently stands at $13 billion, compared to the current market consensus. This revision comes amidst expectations of oil price fluctuations and economic uncertainty potentially affecting the company’s capital plans for 2025. According to InvestingPro data, seven analysts have recently revised their earnings estimates upward for the upcoming period, suggesting mixed sentiment among Wall Street experts.
Occidental Petroleum has preannounced its realizations and reported steady operations, which could lead to adjustments in street estimates. Mizuho analysts highlighted that certain expenditures, such as the Battleground Chemical expansion and the remaining STRATOS budget, are expected to remain unchanged. According to the company’s management, approximately 75% of the 2025 capital plan is allocated to U.S. onshore assets, offering greater flexibility in response to market conditions. The company maintains strong operational efficiency with a gross profit margin of 63% and has demonstrated remarkable dividend consistency, maintaining payments for 52 consecutive years.
The company also anticipates an increase in cash margins as investments in long-cycle projects decrease. Progress towards deleveraging has been noted, with Occidental Petroleum having raised approximately $891 million from warrant tender proceeds. This financial maneuvering provides the company with the opportunity to assess the evolving market landscape and adjust its strategies accordingly, while still meeting its balance sheet objectives.
The decision to lower the net asset value (NAV)-based price target by about 9% to $62 reflects Mizuho’s neutral position on the stock. This assessment takes into account Occidental’s capacity to navigate the challenges posed by the current economic environment while progressing towards its financial targets.
In other recent news, Occidental Petroleum has outlined factors that may influence its financial performance for the first quarter of 2025. The company has released a document titled "Earnings Considerations" as part of an SEC filing, providing insights into these anticipated impacts. Additionally, TD Cowen has downgraded Occidental Petroleum from a Buy to a Hold rating, adjusting the price target from $68 to $45 due to recent shifts in the oil market, including a drop in West Texas Intermediate oil prices. This change reflects a more cautious outlook on the company’s stock amidst market volatility.
Occidental has also secured approval from the U.S. Environmental Protection Agency for Class VI permits, enabling the operation of the world’s largest Direct Air Capture facility in Ector County, Texas. This facility aims to capture up to 500,000 tonnes of carbon dioxide annually, marking a significant step in the company’s carbon management strategy. Furthermore, Occidental has temporarily reduced the exercise price of its publicly traded warrants from $22.00 to $21.30 per share, as part of an offer open until March 31, 2025.
In related developments, the Carlyle Group (NASDAQ:CG) is reportedly seeking a buyer for SierraCol, a Colombian oil production company initially established with assets acquired from Occidental Petroleum. The expected sale price is around $1.5 billion. These recent developments highlight Occidental Petroleum’s strategic moves and adjustments in response to changing market conditions and regulatory advancements.
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