Occidental Petroleum (NYSE:OXY) +1.5% in Friday’s trading, rebounding modestly following the previous session’s 7% slide, after winning analyst upgrades at Scotiabank and Mizuho that praised the company’s proposed OxyChem sale to Berkshire Hathaway.
Scotiabank’s Samantha Hoh raised Occidental (NYSE:OXY) to Buy from Hold with a $55 price target, up from $48, seeing the $9.7 billion sale accelerating Occidental’s (OXY) debt retirement and significantly pulling forward share buybacks, while remaining committed to a sustainable and growing dividend, and forecasting the company to generate a total $4.35 billion of free cash flow after dividends over 2026-27,
At current share prices, Oxy (OXY) could retire 99 million shares, or ~10% of shares outstanding, and still have plenty of runway to build cash ahead of plans to begin redeeming preferred equity in August 2029, the analyst said.
The pullback in Occidental (OXY) shares from disappointment over the OxyChem sale price “presents a great buying opportunity,” Hoh wrote.
Mizuho’s Nitin Kumar boosted Occidental (OXY) to Outperform from Neutral with a $60 PT, up from $58, saying the OxyChem sale “unfetters the balance sheet – our key concern on the investment case – giving OXY financial flexibility to focus on its core oil adn gas business subject to macroeconomic conditions.”
Occidental (OXY) owns one of the best portfolios of U.S. onshore reserves based on inventory quality and depth, which should take center stage going forward, and management should be able to focus on a competitive cash return and buyback program following the deal, Kumar said.