Occidental Petroleum: A Mixed Bag on Wednesday

Occidental Petroleum Corporation (OXY) shares have been on a rollercoaster ride in recent weeks, with the stock experiencing significant price fluctuations. On Wednesday, Occidental Petroleum's stock price increased by 6.30% to $51.96, despite missing revenue estimates in the fourth quarter. This article will delve into the primary factors driving the stock price increase and analyze the company's recent financial performance and analyst ratings.



Geopolitical Tensions and Supply Concerns

One of the primary factors contributing to Occidental Petroleum's stock price increase on Wednesday was the geopolitical tensions and supply concerns in the oil market. A drone attack on a Russian pipeline, which could weaken supply, has led to an increase in oil prices. This could potentially boost Occidental's profits, as higher oil prices typically lead to increased revenue for oil and gas companies. However, it is essential to note that the stock price increase also comes despite a revenue miss in the fourth quarter.

Strong Earnings Beat

Occidental reported adjusted earnings per share of 80 cents, beating analysts’ estimate of 70 cents. This positive earnings surprise could have contributed to the stock price increase. However, it is crucial to consider that the company also missed revenue estimates, which could indicate a potential mismatch between earnings and revenue growth.



Analyst Ratings and Price Targets

Analysts have provided mixed views on Occidental Petroleum's stock, with an average rating of "Hold" from 17 analysts. This suggests that while some analysts are optimistic about the company's prospects, others are more cautious. The 12-month stock price forecast is $60.56, which represents an 18.82% increase from the latest price, indicating that analysts expect the stock to appreciate in the near future.

Stephens analyst Mike Scialla reiterated an "Overweight" rating and a price target of $71, reflecting a bullish outlook on the company. Scialla highlighted several positive aspects of Occidental's fourth-quarter performance, such as beating adjusted earnings and cash flow estimates, achieving a 4% sequential and 19% year-over-year production growth, and successfully reducing near-term debt by $4.5 billion seven months early. However, he also noted that management's first-quarter guidance for total and oil production was 4% and 5% below market estimates due to weather conditions and divestitures.

Raymond James analyst Mark Lear maintained a "Neutral" rating on the stock, indicating a more cautious stance. Lear credited "stronger volumes and Oxychem and midstream beats" for driving growth in the fourth quarter. However, he also pointed out a "glaring negative" in the oil production guidance for the first quarter, with the midpoint at 703 million barrels of oil per day, down around 4% sequentially. The main drivers of lower volumes were divestitures closing by the end of the first quarter and expected ethane rejection in the DJ decreasing production volumes by ~21 mboe/d.

In conclusion, Occidental Petroleum's stock price increase on Wednesday can be attributed to a combination of geopolitical tensions, supply concerns, and a strong earnings beat. However, the company's recent financial performance and analyst ratings suggest a mixed outlook for the stock. While some analysts are optimistic about the company's prospects, others are more cautious due to concerns about production guidance and divestitures. Investors should carefully consider these factors when making investment decisions regarding Occidental Petroleum.