Friday - Mizuho has increased the price target for Occidental Petroleum (NYSE:OXY) shares to $69 from the previous $63 while maintaining a Neutral rating. The adjustment comes as the firm updates its net asset value (NAV) model to reflect the year-end 2023 reserves and the guidance for 2024.
Mizuho's updated model takes into account the expected closure of Occidental's acquisition of CrownRock, now anticipated by September 30, an adjustment from the previously expected June 30. This acquisition is a significant factor in the company's strategy to reduce its debt, with a target to cut more than $14 billion through a combination of free cash flow and asset sales.
The company's efforts to deleverage its balance sheet are especially critical as commodity prices show signs of weakening. Execution of Occidental's financial strategy is, therefore, considered pivotal for the company's future performance. Mizuho notes that while Occidental's stock is trading at a premium compared to its integrated oil company (IOC) and offshore peers, its potential for 'excess' cash returns is limited until the stated debt reduction goals are achieved.
InvestingPro Insights
As Occidental Petroleum (NYSE:OXY) navigates a critical period of financial strategy execution, real-time data and expert analysis from InvestingPro provide additional context for investors. The company's stock, currently trading near its 52-week high, reflects a market capitalization of $56.69 billion, with a P/E ratio (adjusted for the last twelve months as of Q4 2023) at 17.31. Despite a revenue decline of 22.87% during the same period, Occidental has maintained a robust gross profit margin of 60.07%, underpinning its financial strength.
InvestingPro Tips suggest that while 13 analysts have revised their earnings downwards for the upcoming period, the stock's low price volatility and Occidental's track record of maintaining dividend payments for 51 consecutive years could provide some assurance to investors. Additionally, analysts predict the company will remain profitable this year, a testament to its resilience.
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