Morgan Stanley analyst Devin McDermott has maintained their neutral stance on OXY stock, giving a Hold rating yesterday.
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Devin McDermott has given his Hold rating due to a combination of factors surrounding Occidental Petroleum’s recent strategic decisions. The company’s announcement to sell OxyChem for approximately $9.7 billion, with net proceeds of $8 billion after tax, plays a significant role in this assessment. While the sale is expected to dilute free cash flow per share by 5-7% in 2026 and closer to 10% in 2027, it also accelerates debt reduction, lowering the company’s leverage and potentially enabling share buybacks in the future.
Despite the dilution in free cash flow, the transaction is seen as a de-risking move for Occidental Petroleum’s balance sheet. The debt reduction strategy, which includes using $6.5 billion of the proceeds to bring debt below $15 billion, is expected to reduce annual interest expenses by over $350 million. This financial restructuring is balanced against the dilution impact, leading to a Hold rating as the company navigates these changes while maintaining its market position.
In another report released yesterday, Roth MKM also assigned a Hold rating to the stock with a $46.00 price target.