Tuesday, Occidental Petroleum (NYSE:OXY) shares faced a revised price target from Stephens, with analysts lowering it to $58 from the previous $60, while still maintaining an Overweight rating on the stock. According to InvestingPro data, the stock appears undervalued at its current price of $37.90, with analyst targets ranging from $40 to $64. Stephens’ analyst Mike Scialla provided insights into the decision, citing that first-quarter cash flow per share (CFPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates of $2.91 and $3.8 billion respectively, are modestly above the Street consensus.
Scialla’s projections put the company’s capital expenditures and production for the quarter at $1.9 billion and 1,390 thousand barrels of oil equivalent per day (MBoepd), which are 5% higher and in line with other estimates, respectively. Despite the weakening oil markets, Scialla expects Occidental Petroleum might consider reducing its 2025 plan, but the company’s management does not seem close to slashing its fixed dividend. This commitment is backed by an impressive 52-year streak of consecutive dividend payments, as revealed by InvestingPro analysis.
The analyst also mentioned that potential divestitures, free cash flow priorities, and federal support for carbon capture initiatives are topics likely to be addressed in the near future. The adjustment in the net asset value (NAV) per share and the price target to $58 is based on recent NYMEX strip prices, reflecting the current market conditions.
Occidental Petroleum’s financial performance, as well as its strategic decisions regarding asset sales, investment in carbon capture technology, and management of free cash flow, remain areas of focus for investors and analysts alike. The company’s commitment to maintaining its dividend amidst market challenges signals a confidence in its financial stability and long-term strategy. With a market capitalization of $37.2 billion and trailing twelve-month EBITDA of $13 billion, OXY maintains strong fundamentals. InvestingPro subscribers have access to over 30 additional financial metrics and exclusive insights about OXY, including a comprehensive Pro Research Report that provides deep-dive analysis of the company’s performance and outlook.
In other recent news, Occidental Petroleum has highlighted several factors expected to impact its financial performance for the first quarter of 2025. The company has released a document titled "Earnings Considerations" to provide more details, available through an SEC filing. Mizuho Securities has adjusted its outlook on Occidental Petroleum, lowering the price target from $68.00 to $62.00 while maintaining a Neutral rating. This revision is based on an anticipated 7% shortfall in EBITDA compared to market consensus and expectations of oil price fluctuations. TD Cowen has downgraded Occidental Petroleum from a Buy to a Hold rating, significantly reducing the price target to $45 from $68, citing changes in the oil market and a preference for gas-weighted equities.
Occidental Petroleum has also secured U.S. Environmental Protection Agency permits for its carbon capture project, STRATOS, in Texas, marking the first approval of its kind for a Direct Air Capture facility. This project, expected to capture up to 500,000 tonnes of CO2 annually, represents a significant step in the company’s strategy to manage carbon emissions. Additionally, the Carlyle Group (NASDAQ:CG) is reportedly seeking a buyer for SierraCol, a Colombian oil production company established with assets acquired from Occidental Petroleum. SierraCol is expected to sell for around $1.5 billion, according to reports.
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