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Friday – Mizuho raised the price target on Occidental Petroleum (NYSE:) stock to $69 from $63, but maintained the rating at “Neutral.” The adjustment comes as the company updates its net asset value (NAV) model to reflect year-end 2023 reserves and 2024 guidance.
Mizuho's latest model takes into account the expected completion of Occidental's acquisition of Crown Rock, which is now expected to be completed by September 30, an adjustment from the previous estimate of June 30. This acquisition is an important element of the company's debt reduction strategy, which aims to reduce debt. Free cash flow and asset sales combined totaled more than $14 billion.
The company's efforts to clean up its balance sheet are especially important as commodity prices show signs of falling. Therefore, the execution of Occidental's financial strategy is considered critical to the company's future performance. Mizuho said that although Occidental's stock trades at a premium compared to integrated oil companies (IOCs) and offshore peers, the potential for “excess” cash returns remains limited until stated debt reduction targets are achieved. It is pointed out that it is limited.
Investment Pro Insights
As Occidental Petroleum (NYSE:OXY) enters a critical period in its financial strategy execution, InvestingPro's real-time data and expert analysis provides additional context for investors. The company's stock is currently trading near its 52-week high, with a market cap of $56.69 billion and a P/E ratio of 17.31 (adjusted for the past 12 months as of Q4 2023). Despite a 22.87% decline in revenue over the same period, Occidental has maintained a robust gross margin of 60.07%, supporting its financial strength.
InvestingPro Tips found that 13 analysts have revised down next year's earnings, but Occidental's low stock price volatility and 51 consecutive years of maintaining its dividend have provided investors with some peace of mind. It suggests that it may be possible. Moreover, analysts predict that the company will continue to generate profits this year, a testament to its resilience.
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