On Monday, Stephens adjusted Occidental Petroleum's (NYSE:OXY) financial outlook, reducing the stock's price target to $77 from the previous $78, while retaining an Overweight rating on the company's shares.
The revision comes after Occidental Petroleum's preannouncement of realized oil, natural gas liquids (NGL), and gas prices, which led to a downward revision in the firm's second-quarter cash flow per share (CFPS) and earnings before interest, taxes, depreciation, and amortization (EBITDA) estimates.
The firm's analyst stated that the new estimates for the second quarter CFPS and EBITDA are now set at $2.68 and $3.1 billion respectively, marking a decrease of 4% and 3% from the prior estimates of $2.78 and $3.2 billion. These updated figures fall 8% and 13% below the consensus of Wall Street analysts. The reasons behind the adjustment are primarily attributed to the prereleased prices for oil, NGL, and gas.
Furthermore, Stephens has reaffirmed its estimates for Occidental Petroleum's second-quarter capital expenditure (capex) and production, which stand at $1.7 billion and 1,252 thousand barrels of oil equivalent per day (MBoepd) respectively. These projections are said to align with the general market consensus.
The reduction in the target price and net asset value (NAV) per share by 1% to $77 from $78 is based on an updated share count. This revised target reflects the latest financial and operational data made available by Occidental Petroleum. The Overweight rating suggests that Stephens continues to view the stock favorably, despite the minor adjustments to the company's financial estimates.
In other recent news, Berkshire Hathaway (NYSE:BRKa), led by Warren Buffett, has been expanding its stake in Occidental Petroleum, reaching nearly a 29% ownership. The conglomerate acquired an additional 2.95 million shares in the oil company, part of a total of 5.5 million shares purchased this month. Additionally, the firm holds warrants to buy another 83.5 million shares, providing potential for further influence in Occidental Petroleum.
On the analyst front, Roth/MKM maintained a neutral rating for Occidental Petroleum, influenced by factors such as the company's relatively higher debt and lower projected long-term production growth. Truist Securities downgraded the company's stock from Buy to Hold, due to less anticipated benefits from its CrownRock acquisition.
Occidental Petroleum exceeded Q1 expectations with record production and significant cost reductions. The company also plans to improve cash flow by over $1 billion and is focused on strengthening its balance sheet.
In another development, the company was mentioned during former President Donald Trump's fundraising tour in Texas, where he garnered significant support from the energy sector. These are just a few of the recent developments concerning Occidental Petroleum.
InvestingPro Insights
As Occidental Petroleum (NYSE:OXY) navigates through a period of financial adjustments, insights from InvestingPro provide a deeper look into the company's performance and stability. With a market capitalization of $54.78 billion, Occidental stands as a significant player in the energy sector. The company's Price/Earnings (P/E) ratio, a key indicator of market expectations, stands at 15.65, revealing how investors are valuing its earnings power relative to its share price.
Occidental's commitment to shareholder returns is highlighted by its impressive track record of maintaining dividend payments for 51 consecutive years, a testament to its financial resilience and management's confidence in its business model. This InvestingPro Tip aligns with the company's recent financial outlook and supports the notion that Occidental is a stable investment, even in the face of short-term market fluctuations.
Despite revisions in earnings, analysts remain optimistic about Occidental's profitability, as indicated by the company's performance over the last twelve months. This InvestingPro Tip is further substantiated by the company's gross profit margin of 59.58%, showcasing its ability to maintain a strong profit ratio amidst industry challenges. Occidental's ability to generate a healthy operating income margin of 19.18% further solidifies its position as a profitable enterprise.
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