On Thursday, Mizuho Securities adjusted its price target for Occidental Petroleum (NYSE:OXY), a major oil and gas company, increasing it slightly to $70.00 from the previous $69.00. The firm has chosen to maintain a Neutral rating on the stock.
The adjustment comes in light of Occidental Petroleum's announcement regarding delays in Gulf of Mexico (GOM) production volumes, which are anticipated to impact the company's earnings for the first quarter of 2024.
The company reported that its GOM production is expected to be around 90 thousand barrels of oil equivalent per day (mboe/d), which is lower than the prior guidance of 107-115 mboe/d. While U.S. shale production has been strong, the reduction in GOM volumes is projected to affect both the overall corporate production and earnings, although the total output remains within the guided range but below the midpoint.
Mizuho's EBITDA estimate for Occidental Petroleum is approximately 15% below the current consensus on Wall Street. This estimate takes into account the updated production figures, as well as the company's operational expenditure and pricing guidance. Despite the near-term challenges posed by the GOM volume delay, the improved outlook for oil prices is expected to be beneficial for the company's leverage profile.
The focus for Occidental Petroleum continues to be on its efforts to reduce debt, especially in anticipation of the completion of the CrownRock deal. Higher oil prices are seen as a positive factor that could aid in these deleveraging efforts. The new price target of $70 is based on a net asset value (NAV) approach, reflecting Mizuho's assessment of the company's intrinsic value given the current circumstances.
InvestingPro Insights
In the context of Occidental Petroleum's recent production updates and Mizuho Securities' adjusted price target, certain metrics and tips from InvestingPro provide additional insight into the company's financial health and stock performance. Occidental's market capitalization stands at a robust $61.11 billion, and the company has a price-to-earnings (P/E) ratio of 16.35, which adjusts to 18.67 when considering the last twelve months as of Q4 2023. This suggests a reasonable valuation relative to earnings.
The company's commitment to shareholder returns is demonstrated by its impressive track record of maintaining dividend payments for 51 consecutive years. Additionally, with a dividend yield of 1.28%, investors may find the stock to be an attractive option for income. An InvestingPro Tip highlights the stock's low price volatility, which could appeal to investors seeking stable investments in the current market environment.
From a performance standpoint, Occidental has seen a strong return over the last three months, with a price total return of 20.74%. This performance is trading near its 52-week high, with the price at 98.78% of this peak. Analysts predict the company will be profitable this year, which is corroborated by the company's profitability over the last twelve months.
For those interested in a deeper dive into Occidental Petroleum's financials and stock performance, InvestingPro offers additional tips and real-time metrics. By visiting https://www.investing.com/pro/OXY, readers can access these insights and consider using the coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription. With 6 more InvestingPro Tips available, investors can gain a more comprehensive understanding of Occidental Petroleum's potential investment value.
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