Occidental Petroleum, the Energy sector company, was revisited by a Wall Street analyst today. Analyst Arun Jayaram from J.P. Morgan maintained a Hold rating on the stock and has a $50.00 price target.
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Arun Jayaram has given his Hold rating due to a combination of factors related to Occidental Petroleum’s financial and operational outlook. The company is expected to report strong third-quarter results, partly due to favorable conditions in the U.S. Gulf and advantageous midstream earnings driven by the spread between Waha and Gulf Coast natural gas prices. However, despite these positive short-term indicators, there are concerns regarding Occidental’s balance sheet, particularly following the CrownRock acquisition, which was heavily financed through debt.
Jayaram notes that while Occidental has made progress in its deleveraging efforts, more work is needed to align its leverage ratio with industry peers. The company’s strategy involves using free cash flow, asset sales, and a halt in share buybacks to reduce debt. Additionally, the valuation of Occidental’s undeveloped assets and inventory quality impacts the overall assessment. These factors contribute to a cautious outlook, justifying the Hold rating as the company navigates its financial strategy and market conditions.
In another report released on October 10, Roth MKM also maintained a Hold rating on the stock with a $46.00 price target.