Oracle upgraded after Q3 results

J.P. Morgan upgraded Oracle (ORCL) to Overweight from Neutral, following the company’s third-quarter results.

The brokerage noted that the severe selloff improves risk-reward against a backdrop of thick investor pessimism. However, the firm lowered PT on the stock to $210 from $230.

Analysts led by Mark Murphy said that they upgraded the shares due to several reasons. They said the material selloff in Oracle’s shares, down 55% since mid-September (versus +1% for the S&P 500 and 0% for the NASDAQ), de-risks valuation.

Murphy and his team noted that the upgrade was also based on incremental proof points supporting the ability to accelerate top line rapidly and converge on growth territory while still growing operating income in the double-digits.

Morgan Stanley adds CrowdStrike to its Top Pick

Morgan Stanley upgraded CrowdStrike (CRWD) to Overweight from Equal-weight and added the cybersecurity company to its Top Pick.

“Upgrading CRWD as durable platform winner from favorable AI positioning, growing uptake of emerging modules and improving endpoint trends. Valuation expensive, but view 20%+ topline growth potential, improving margin/FCF profile and defensible moat as ample justification,” said analyst Meta Marshall, and raised PT on the stock to $510 from $487.

The analysts see CrowdStrike as best able to outperform in coming years, as the platform is most able to gain share, along with Palo Alto Networks (PANW).

Occidental Petroleum gets two analyst upgrades

Wells Fargo upgraded Occidental Petroleum (OXY) to Overweight from Underweight with a $69 price target, up from $47, while Piper Sandler raised the stock to Overweight from Neutral with a $66 PT, up from $54.

Wells Fargo’s Sam Margolin double upgraded Occidental, saying the stock’s peer-leading oil sensitivity is “both an opportunity and a risk,” but stronger Permian Basin productivity and improved capital intensity now support a more constructive setup.

Piper Sandler’s Mark Lear views Occidental as one of the best operators in the Delaware Basin that continues to deliver among the best operating performance in the basin despite some degradation in FY 2025, and noted the company’s FY 2026 guidance was much more capital efficient than initial soft guidance.

Micron in focus ahead of quarterly results

Citi increased price target on Micron (MU) to $430 from $385 ahead of the company’s quarterly results, citing surging memory prices and AI demand.

“We raise our Feb-Q/Apr-Q estimates above the Street driven by better YTD [year-to-date] memory prices. Citi global memory analyst Peter Lee expects DRAM ASPs [average selling prices] to increase 171% Y/Y in 2026 on strong data center demand and NAND ASPs +127% Y/Y on robust eSSD demand. Moreover, media reports (etnews, 4 March 2026) indicate Samsung increasing the DRAM prices 100% Q/Q in 1Q,” said analysts led by Atif Malik.

Wedbush Securities also reiterated its Outperform rating and raised PT to $500 from $320, citing stronger-than-expected pricing.

Nvidia (NVDA) was in focus as Bank of America reiterated its Buy rating and $300 price target on the semiconductor giant ahead of its annual GTC event, set for next week.

Jefferies analysts led by Laurence Alexander raised earnings estimates for several fertilizer producers and upgraded Nutrien (NTR) to Buy, citing a sharp rise in benchmark prices following geopolitical disruptions to production and shipping routes. The brokerage raised its price target by 30% to $96 from $74.

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Occidental Petroleum (OXY) +5.9% in Thursday’s trading, rallying to its best level since August 2024 after Wells Fargo upgraded shares to Overweight from Underweight with a $69 price target, up from $47, while Piper Sandler raised the stock to Overweight from Neutral

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The national average price for gasoline rose to $3.32 per gallon on Thursday, Bloomberg reported, citing the American Automobile Association. Gasoline futures (XB1:COM) have surged about 27% this week, putting them on track for their largest weekly gain since March 2022.

In an interview with Reuters, U.S. President Donald Trump said he was not concerned about rising fuel prices driven by the widening conflict with Iran, saying the U.S. military operation remained his priority. “I don’t have any concern about it,” Trump said when asked about higher prices at the pump. “They’ll drop very rapidly when this is over, and if they rise, they rise, but this is far more important than having gasoline prices go up a little bit.”

Higher fuel costs could pose a political challenge for Trump, who has frequently highlighted lower gasoline prices as evidence of U.S. energy dominance, as the increase comes ahead of the 2026 United States midterm elections later this year.

Supply concerns have intensified as Asian refiners face disruptions to crude shipments that typically pass through the Strait of Hormuz, a key global energy transit route. Some refiners are considering reducing processing rates, while China has reportedly instructed its largest refiners to suspend diesel and gasoline exports.

The Middle East disruption also coincides with the seasonal transition by U.S. refiners from producing winter-grade gasoline to more expensive summer-grade fuel, a shift that typically pushes pump prices higher in the spring.

Crude oil futures (CL1:COM) have advanced +24% to $83.27/barrel in the past five days. Brent prices (CO1:COM) also jumped over 18.8% to $86.67/barrel. Oil majors Exxon Mobil (XOM), Chevron (CVX), ConocoPhillips (COP), and Occidental Petroleum (OXY).

U.S. pure-play fuel retailers and distributors include Murphy USA (MUSA), Sunoco LP (SUN), Global Partners LP (GLP), and CrossAmerica Partners LP (CAPL). U.S. refiners such as Marathon Petroleum (MPC), Valero Energy (VLO), Phillips 66 (PSX), and HF Sinclair (DINO) can also be affected by rising gasoline prices.

Rising U.S. gasoline prices could affect retailers that sell gasoline to drive store traffic, including BJ’s Wholesale Club (BJ), Costco Wholesale (COST), and Walmart (WMT).

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Phase 1 is “in the final stage of startup,” and Phase 2, which incorporates learnings from research and development and Phase 1 construction activities, will also begin commissioning in Q2, with operational ramp-up continuing through the rest of the year, 1PointFive said.

Once fully operational, STRATOS is designed to capture as much as 500K metric tons/year of carbon dioxide.

A few activities remain before start-up, including ramping up remaining pellet reactors, completing calciner final commissioning in parallel, and beginning CO2 injection, the company said.

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Six S&P 500 energy companies reported quarterly results this week, with four surpassing earnings expectations, and one reporting in-line. On the revenue front, four topped Wall Street estimates, while the remainder came in below forecasts.

So far this year, the energy sector has gained ~23%, compared to the broader S&P500 index’s slight gain in the same period.

Below are the latest quarterly reports from top energy companies this week:

Devon Energy (DVN) outlined $1B annual synergy target by 2027 following Coterra merger, signalling enhanced shareholder returns. The CEO also announced Devon’s increased investment in Fervo Energy, raising its stake to approximately 15% in the geothermal energy company.

EQT (EQT) targets $3.5B in 2026 free cash flow with expansion in midstream and infrastructure investments. Management cited structural constraints in U.S. natural gas infrastructure, with CEO Toby Rice warning, “These price signals are unmistakable. The country needs more pipeline infrastructure and a permitting framework that allows the industry to get back to building critical infrastructure again.”

Occidental (OXY) targets 1.45M boe/d production in 2026 with $5.5B-$5.9B capital plan as cost efficiencies deepen. CEO Vicki Hollub outlined 2026 priorities: maintaining production base through safe operations, sustaining and growing dividends (including an 8% increase to the quarterly dividend), and further strengthening the financial position with continued net debt reductions.

Expand Energy (EXE) outlined $0.20 margin uplift strategy amid 35%–40% gas demand growth forecast. In 2026, Expand Energy expects to run between 11 and 12 rigs and invest approximately $2.85 billion yielding an estimated daily production of approximately 7.5 Bcfe/d.

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Management View

• Vicki Hollub, President and CEO, described 2025 as an exceptional year, emphasizing that “the sale of OxyChem made possible by the quality of our portfolio was a deliberate step to strengthen our balance sheet and enable us to deliver greater value from our high-return oil and gas assets.” Hollub noted a new annual production record of 1.4 million barrels of oil equivalent per day, surpassing guidance while spending $300 million less in oil and gas capital than planned and reducing annual operating expenses by $275 million. She highlighted the completion of a 10-year portfolio transformation, stating, “we no longer require transformative acquisitions. Instead, our teams are focused on what they do best, and that is execution, including cost reduction, capital efficiency and well performance.”
• Sunil Mathew, CFO, stated, “In the fourth quarter, we delivered strong operational and financial results. We generated an adjusted profit of $0.31 per diluted share and a reported loss of ($0.07) per diluted share. The difference was largely driven by charges and transaction costs related to the sale of OxyChem.” He highlighted free cash flow generation of approximately $1 billion despite lower realized oil prices and emphasized the successful reduction of principal debt to $15 billion, with a $700 million tender offer announced to further reduce debt to $14.3 billion.
• Richard Jackson, COO, emphasized operational achievements, including record production, a 15% reduction in new well capital costs in U.S. onshore, and ongoing cost efficiency efforts that delivered approximately $2 billion in annual oil and gas cost savings since 2023. He noted that “these efficiencies further enabled us to reduce U.S. onshore capital by $400 million compared to 2025 while still delivering a 1% production growth.”
• Hollub announced that Jordan Tanner will transition to a leadership role in the Gulf of America, with Babatunde Cole appointed as Vice President of Investor Relations.

Outlook

• Hollub outlined 2026 priorities: maintaining production base through safe operations, sustaining and growing dividends (including an 8% increase to the quarterly dividend), and further strengthening the financial position with continued net debt reductions. She said, “We expect capital spending to range from $5.5 billion to $5.9 billion, representing a $550 million reduction from 2025, excluding OxyChem.”
• Mathew projected, “we expect production to average approximately 1.45 million barrels of oil equivalent per day,” and said, “we expect to improve free cash flow by more than $1.2 billion in 2026.”
• The company expects approximately 70% of oil and gas capital to be allocated to U.S. onshore operations, with flexibility to respond to commodity price improvements.

Financial Results

• Occidental generated $4.3 billion in free cash flow before working capital in 2025, even as oil prices declined by around 14% from 2024.
• On a normalized basis and excluding OxyChem, cash flow from operations increased by 27% year-over-year.
• Principal debt reduced to $15 billion, with a tender offer expected to bring this to $14.3 billion.
• The Midstream segment exceeded the midpoint of guidance by more than $500 million in adjusted pretax income for the year; Q4 adjusted pretax income exceeded guidance by $172 million.
• The company achieved its lowest lease operating expense per barrel of oil equivalent since 2021, with Q4 domestic operating expense at $7.77 per BOE.

Q&A

• Arun Jayaram, JPMorgan: Asked about the lower CapEx guide and the drivers of the $800 million reduction. Hollub stated, “our teams came up with these ideas on what we should do and what were the best projects. But as they continue to optimize those projects, it was pretty amazing to see the cost that they were able to cut out, the efficiencies that they were able to find.”
• Jayaram also asked about the Horn Mountain waterflood project and its potential to support a sustaining production profile in the Gulf. Dillon responded, “this waterflood, the King dump flood, the future waterfloods… will move from a 20% to sub-10% decline by 2030 and improving to below 5% in subsequent years.”
• Nitin Kumar, Mizuho: Inquired about the unconventional portion of the sub-$30 per barrel breakeven resource. Hollub explained, “the secondary benches are providing now as much value as the primary benches did… the average resource is about a $38 per barrel breakeven.”
• Kumar followed up on share buybacks. Mathew said, “we would like to first get our principal debt to $10 billion, but we are not setting a time frame to get to this target as we want to have some flexibility.”
• Wei Jiang, Barclays: Explored the sustainability of cost savings into 2027. Mathew noted, “we expect to maintain this momentum into next year. So we could see a modest growth with this year’s capital depending on the efficiency and new well performance.”
• Douglas Leggate, Wolfe Research: Asked about sustaining capital at different oil prices and the outlook for LCV. Mathew outlined how sustaining capital is calculated, “from $5.7 billion, you back out LCV and exploration of $300 million, you’re at $5.4 billion… and going from $5.2 billion to $4.1 billion at $40, that is primarily deflation, around 20% deflation.”

Sentiment Analysis

• Analysts focused on CapEx reductions, cost efficiency sustainability, capital allocation flexibility, and sustaining production levels, with a generally positive but probing tone. Multiple questions centered on structural cost savings and their impact on future years.
• Management maintained a confident tone in prepared remarks, using phrases like “we are perfectly positioned” and “I’m confident that our teams will continue to innovate.” In Q&A, management continued to emphasize operational excellence and cost discipline, reiterating flexibility and the sustainability of improvements.
• Compared to the previous quarter, management’s tone remained confident but placed greater emphasis on cost discipline and flexibility, while analysts maintained a constructive but slightly more detailed and probing approach regarding the durability of efficiencies.

Quarter-over-Quarter Comparison

• Guidance for 2026 capital spending was notably reduced to $5.5 billion–$5.9 billion from the previous “soft guide” range of $6.3 billion–$6.7 billion, reflecting deeper cost efficiencies and project optimization.
• Dividend growth focus strengthened with the announcement of an 8% increase.
• Debt reduction accelerated, with the principal debt moving to $15 billion and a new target of $14.3 billion.
• Analysts in both quarters questioned the sustainability of cost reductions and the impact of capital allocation, but current quarter questions showed greater scrutiny on the structural nature of savings and the long-term outlook for sustaining capital.
• Management confidence increased regarding the resource base and operational agility, highlighting a shift from transformative acquisitions to execution and efficiency as the core strategy.

Risks and Concerns

• Management noted the ongoing industry challenge of reserves replacement and the importance of maintaining a high reserves replacement ratio.
• The outlook for oil prices remains uncertain, with Hollub expressing caution about the sustainability of recent geopolitical price spikes.
• Analysts raised questions about the durability of cost savings, the ability to sustain production growth, and the flexibility of capital allocation in different macro scenarios.
• Mathew acknowledged that no timeframe is set for reaching the $10 billion principal debt target, signaling market-dependent flexibility.

Final Takeaway

Occidental Petroleum delivered a year of record operational and financial performance, marked by substantial cost efficiencies, balance sheet strengthening, and a strategic focus on sustaining and growing shareholder returns. The company’s 2026 plan projects lower capital spending of $5.5 billion to $5.9 billion while targeting average production of 1.45 million BOE per day. Management emphasized continued cost discipline, resilient free cash flow growth, and capital allocation flexibility, positioning Oxy for long-term value creation amid uncertain commodity markets and industry-wide challenges in reserves replacement.

Read the full Earnings Call Transcript

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