Occidental Petroleum (OXY) PT Raised to $43 at JPMorgan, '$100 Oil Opens Up Many Options'
JPMorgan analyst Phil Gresh raised the price target on Occidental Petroleum (NYSE: OXY) to $43.00 (from $39.00) while maintaining a Neutral rating.
The analyst comments "We maintain our Neutral rating. OXY has shown solid execution throughout the COVID-19 downturn, managing a fairly stable production profile at minimal levels of capex. The company has also executed on an asset sale program to accelerate de-leveraging. With net debt set to hit its $25B interim leverage target in 1Q22, OXY has unveiled an updated capital allocation framework, where net debt will be lowered further to $20B, the dividend has been hiked to a ~1.3% yield, and share repurchases should begin in 2H. The company could potentially chip away at its $10B of preferred stock (not included in the $20B of net debt) once it exceeds $4/share of returns to common shareholders. Therefore, OXY’s value to the equity holder is most likely to be through the transfer of value from debt reduction and potentially preferred reduction as a next level. One additional consideration for OXY is its CCUS opportunity, given its EOR CO2 assets, around which we await more details, which mostly seem to be in the Direct Air Capture (DAC) arena. All in, we think the story works well at current commodity price levels, but valuation relative to the group is close to fair, in our view."