Mizuho reaffirmed its Neutral rating on Occidental Petroleum (NYSE:OXY) with a steady price target of $72.00. The firm's outlook anticipates an EBITDA report from OXY that aligns with expectations, though their earnings per share (EPS) estimate is approximately 19% lower than the consensus. This variance is attributed to adjustments in share count and the non-controlling interest (NCI) of Western Midstream Partners (NYSE:WES).
The company has already disclosed its domestic gas realization for the quarter at $0.40 per million British thermal units (mmbtu), providing a basis for Mizuho's analysis. The firm anticipates some strength in Occidental's midstream operations due to weak Waha pricing, a slight decline in the chemicals (Chems) segment due to demand fluctuations in Asia, and potentially increased downtime in the Gulf of Mexico (GOM), which is projected to be at the lower end of the guidance range.
Following Occidental's sale of WES shares, its share of income from WES decreased from about 51% to 46%. Investors are expected to focus on Occidental's ongoing asset divestitures, which have reached approximately $3.8 billion in announced sales to date. Additional points of interest include the performance of the Crownrock assets and the development of various Low Carbon Venture projects.
Mizuho's price target is based on a net asset value (NAV) approach, and the firm has reiterated its Neutral rating on Occidental Petroleum's stock.
Occidental Petroleum demonstrated robust Q3 2024 performance, with realized prices aligning with market expectations, as noted by Truist Securities. The company successfully reduced its principal debt by $3 billion in the same quarter, achieving nearly 85% of its $4.5 billion debt reduction target.
A significant development was the acquisition of CrownRock, which increased Occidental's presence in the Permian Basin and shifted the company's focus towards debt reduction. This move prompted Goldman Sachs to resume coverage on Occidental with a Neutral rating.
In the backdrop of these developments, escalating tensions in the Middle East have led to a significant rise in oil prices, potentially disrupting oil supplies. Furthermore, the impending Hurricane Francine has prompted oil and gas producers, including Occidental, to cease operations in the Gulf of Mexico.
InvestingPro Insights
Recent data from InvestingPro sheds additional light on Occidental Petroleum's financial position and market performance. The company's market capitalization stands at $48.22 billion, with a P/E ratio of 11.85, indicating a relatively low valuation compared to earnings. This aligns with Mizuho's Neutral rating and could suggest a balanced risk-reward profile for investors.
An InvestingPro Tip highlights that OXY has maintained dividend payments for 51 consecutive years, demonstrating a strong commitment to shareholder returns. This consistency in dividends could be particularly appealing to income-focused investors, especially given the current dividend yield of 1.71%.
Another relevant InvestingPro Tip notes that the stock is trading near its 52-week low. This information, coupled with Mizuho's price target of $72.00, suggests potential upside for the stock if market sentiment improves or if the company's ongoing asset divestitures and Low Carbon Venture projects yield positive results.
For investors seeking a more comprehensive analysis, InvestingPro offers 5 additional tips that could provide further insights into Occidental Petroleum's financial health and market position.
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