Occidental Petroleum (NYSE:OXY) will announce its Q3 financial results on November 8. Like other energy companies, higher year-over-year oil prices will drive earnings growth in Q3. However, on a sequential basis, OXY’s earnings will decline as oil prices have moderated in the recent past on account of economic uncertainty. Nevertheless, momentum in the OxyChem segment will cushion its bottom line.
In Q2, average worldwide realized crude oil prices jumped 17% from the prior quarter. Moreover, the prices of natural gas liquids (NGL) grew by about 6%. Higher prices drove OXY’s pre-tax income in the Oil and Gas segment. Further, the higher realized pricing and solid demand drove record earnings in its OxyChem business.
WTI (West Texas Intermediate) and Brent crude prices per barrel have moderated to nearly $90 in Q3 from over $108/barrel in Q2. Given the decline, analysts expect OXY to report earnings of $2.48 a share in Q3 compared to $3.16 in Q2.
Against this background, let’s take a look at what analysts recommend on OXY stock ahead of Q3.
Is OXY a Buy Right Now?
OXY stock has outperformed most energy companies in 2022. It has delivered a year-to-date gain of about 153% compared to the increases of 84% and 56% in Exxon Mobil (NYSE:XOM) and Chevron (NYSE:CVX) stock, respectively.
However, given the moderation in oil prices, OXY stock has a Moderate Buy consensus rating based on four Buy and seven Hold recommendations. Further, its average price target of $75.80 implies a 3.5% upside potential.
OXY stock has positive signals from hedge funds and insiders, who accumulated its stock last quarter. Further, Occidental Petroleum’s stock has an Outperform Smart Score of “Perfect 10.”
The moderation in oil and gas prices amid uncertainty could lead to a sequential decline in its earnings in Q3 and limit the upside in OXY stock. Further, Occidental’s stock is trading at an enterprise value-to-EBITDA multiple of 5.11, which is roughly at par with the peer group average.