Occidental Petroleum: UBS maintains Neutral, PT raised to $45 from $42.

Occidental Petroleum: UBS maintains Neutral, PT raised to $45 from $42.

UBS has updated its rating and price target for Occidental Petroleum (OXY) to Neutral, with a new price target of $45.00, up from the previous $42.00. The change comes as the investment bank reassesses the company's debt situation and financial performance.

According to UBS, Occidental Petroleum's debt-to-EBITDA ratio is expected to remain high, with a projected ratio of approximately 2x by the end of 2025. The company's current total debt stands at $24.2 billion, with a debt-to-equity ratio of 0.88x. Despite significant progress in reducing debt, with approximately $7.5 billion repaid since the CrownRock acquisition, UBS notes that share repurchases have been paused until the debt target is reached [1].

UBS's revised price target reflects the company's recent earnings report, which showed an adjusted earnings per share of $0.39 in the second quarter of 2025, exceeding Wall Street expectations. The company also reported revenues of $6.46 billion, higher than the anticipated $6.24 billion. However, UBS cautions that the stock's valuation remains above the peer median, and the company's shareholder return yield lags behind competitors, projecting a 2% yield compared to the peer median of 7% in 2025 [1].

Warren Buffett's Berkshire Hathaway, which holds a 28.2% stake in Occidental Petroleum valued at $11 billion, has signaled long-term confidence in the company's energy resilience. Berkshire Hathaway's investment in OXY has grown steadily since 2019, with significant additions in early 2025. Morningstar values OXY at $59/share, supporting its undervaluation amid energy transition and operational efficiency gains [2].

UBS's Neutral rating and price target reflect a cautious stance on the company's debt situation and valuation. However, the investment bank acknowledges the company's progress in reducing debt and generating free cash flow, which could support shareholder returns in the future.

References:
[1] https://www.investing.com/news/analyst-ratings/morgan-stanley-downgrades-occidental-petroleum-stock-on-debt-concerns-93CH-4196824
[2] https://www.ainvest.com/news/occidental-petroleum-strategic-buy-bottom-cycle-2508/