Occidental Petroleum Corporation (NYSE: OXY) is a major player in the oil and gas industry, known for its operations in the United States, the Middle East, and Latin America. The company is involved in the exploration and production of oil and natural gas, as well as chemical manufacturing. Occidental competes with other energy giants like ExxonMobil and Chevron.
Over the past year, Occidental's consensus price target has experienced fluctuations. Last month, analysts set the average price target at $54, reflecting a slight increase from the previous quarter's $52.5. This upward revision suggests improved market conditions or company performance. Analyst Paul Cheng from Scotiabank has set a price target of $57, indicating a positive outlook for the company's performance in the upcoming earnings season.
A year ago, the average price target was significantly higher at $68.53. The decrease in price targets over the year may be due to market volatility, changes in oil prices, or shifts in Occidental's operational performance. Despite these challenges, Occidental is currently rated as a "Buy" due to its strong production growth and significant undervaluation. The company's Q4 2024 guidance highlights robust production and improved margins, particularly from its Permian assets and OxyChem.
Occidental's share price has recently underperformed, partly due to a downgrade by Goldman Sachs. The downgrade was based on the company's strategic focus on reducing debt rather than prioritizing immediate capital returns to shareholders. Despite weak oil prices, Occidental continues to demonstrate strong production capabilities and free cash flow, with a breakeven point at $45 per barrel and a double-digit free cash flow yield.
Occidental is also making progress in its Direct Air Capture (DAC) projects aimed at emissions management. These initiatives are expected to take several years before significantly impacting the company's portfolio and revenue. As Occidental prepares to release its earnings following the Presidents Day holiday, investors should keep an eye on any developments that might influence future price targets.
