OXY Stock Forecast: OXY trades Lower, Outlook is Buy



OXY Stock Forecast: OXY trades Lower, Outlook is Buy

OXY Stock Forecast: The overall recommendation is Buy.

OXY Stock Forecast: Latest Price

Share Volume 8.3 M
Forward P/E (1 Year) 6.59

OXY Stock: Momentum Summary

Metric Trend
Overall Marginally Negative
1a. Market Data Negative
Price Lower
Volume Lower
Technical Indicator Buy
1b. Crowd’s Wisdom Neutral
Social Media Sentiment Lower
Google Search Higher

Occidental Petroleum Corporation Performance Chart

Stock Name 5 days 1 Month 6 Months 1 Year
OXY Stock +4.75% +11.14% +77.09% +189.14%

OXY Stock Forecast: Support and Resistance

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OXY Stock Forecast: CrowdWisdom360-Insights

  • Recently, Warren Buffett has invested another $1.5 billion in Occidental Petroleum (OXY), boosting his holding firm Berkshire Hathaway (BRK.B )’s in the company to 118.3 million shares worth $6.9 billion.
  • Occidental Petroleum’s stock has risen about 90% in the last year as oil prices have risen. And, shares are up 3.21% over the past week. The earnings outlook seems to be positive. As the earnings estimates moved higher over past two months. The stock now has a momentum score of B.
  • The search volumes in Google Trends is back up after the fall over last couple of days, in anticipation of stock price and Berkshire Hathaway investments.
  • Taking all of these factors into consideration, The short-term recommendation is to buy this stock.

Oxy Stock Forecast: Google Trends

Google Search Volume for OXY is Higher than yesterday.

OXY Stock Forecast: Latest Tweets

Also Read: Plug Stock Forecast

Oxy Stock Forecast: Bull Case

  • Rising Crude Oil Prices- The world is in turmoil since past two weeks, thanks to Russia – Ukraine war. In this world of globalization, no event affects just one or two countries and this war has affected crude oil prices positively, both Brent Crude and West Texas Intermediate (WTI) crude. Crude prices have crossed $130 per barrel and this has led to fresh buying in Occidental Petroleum Corporation. In last one-month Oxy stock has rallied 34%, outperforming S&P 500, which is down by 7.05% as of 9.03.2022. Occidental is engaged in exploration and production of oil and natural gas. As the prices are expected to go up in near future, or at least it is not expected to come down below $100 per barrel, profitability and revenue for oil producing countries will definitely proportionately increase.
  • US sanctions on Russian Oil and Gas Imports- Russia is one of the largest producer and exporter of oil and natural gas. Recently US president Joe Biden announced new sanctions on import of Russian Oil and Natural gas imports in the wake of Russian invasion of Ukraine. This step will not increase the prices of crude oil and keep them inflated in the near future, but also provides local suppliers a golden opportunity to capture the market share. Occidental Petroleum major production is around Permian Basin, and this along with shale basin can ramp up production to meet US local demand and create a long lasting impact in these challenging times.
  • Better than expected Q4 results – Occidental announced Q4 2021-22 results on 24th February 2022. The results comfortably beat market expectations on various fronts. Earnings per share came at $1.48, while the expectations were $1.10 per share. It reported a loss of $0.65 per share in the same quarter last year. Revenue for fourth quarter came at $7.79 billion, in comparison to $4.56 billion in the same quarter last year. The company pumped on an average 1180 thousand barrels of oil per day in 2021, compared to 1130 thousand barrels’ in 2020. All this signals towards an increase demand and increased supply coupled with increased profitability and revenue.
  • Plan to reduce debt and reward investors- It is one thing to increase revenue/profitability in a conducive market and it is another thing to put the money in right use. One good thing about Occidental is that it is using excess cash to pay off its long term debt. News report say that company has decided to pay down $2.5 billion of junk rated debt. However, the good news does not stop here and board of directors have also approved $0.13 cents of quarterly dividends for investors up from $0.01 paid last time. That’s whooping 1200% increase in the dividend. Also $3 billion share repurchase program has been approved. These three steps signal different positive intentions of management. On one hand, reducing debt will improve balance sheet, dividend is reward for loyal shareholders and share repurchase shows the confidence of management towards their own company. The company seems to be headed in right direction.
  • Berkshire Hathaway owns stake in Occidental Petroleum worth $5 billion- In a recent SEC filing, it is revealed that someone at Berkshire Hathaway has made a fresh purchase of 61 million shares of Occidental shares taking the total ownership to 91.2 million shares. Apart from shares, it also owns warrants to buy 84 million shares at price of $59.62. Noticeably, Berkshire received those warrants in exchange of 10 million loan in 2019 to Occidental to help it buy Anadarko for $38 billion. A big investor like Warren Buffett or his company investing in a stock boosts the morale of investors and is a big positive news for Oxy shares.

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Oxy Stock Forecast: Bear Case

  • Challenges in ramping up Oil Production- As discussed above, US sanctions on Russian imports of oil and Natural gas do provide Occidental an opportunity to ramp up production, but it seems it is not going to be an easy task. The supply chain not only in oil industry, but all over the world is not favorable to increase production at this juncture of time. As per Vicki Hollub, President and CEO of Occidental Petroleum Corporation, part of the difficulty also lies in revamping the wells that have gone past their peaks. Labor shortages and procuring required raw material are also expected to hamper increase in oil production goal. According to her, incremental production cannot take place right away and US producers were only prepared to keep the oil production flat in 2022.
  • No return in last five years- On 10th March 2017, Oxy stock was at $62.60 and the upward journey continued till mid of 2018, when it touched $86 per share on 18th May 2018. But since then it has been a dismal performance by Occidental. In the time of pandemic, it hit a low of $10 on 23rd October 2020. Although it has recovered from that level to $57.27 as of 11:52 am, 9th March 2022, but it signals towards heavy dependence towards oil prices in the near future. As and when, uncertainties glooming around the globe subsides, crude prices are expected to crash and with that share prices of Oxy stock. So apart from fundamental factors of company, there are so many external factors deciding the future price of a stock and that is something not good for an investor.

Oxy Stock Forecast: Oxy Stock Buy or Sell?

There are so many things to like about Occidental Petroleum Corporation for a start. The company’s fundamentals are good apart from large debt of around $30 billion as of now. Company wants to get that down to $20 billion by end of 2022 and payout of $2.5 billion is a step in that direction. Also increasing oil prices do support the company and present it with an opportunity, but it is not clear that how long lived this opportunity will be and whether Occidental is prepared to get benefit out of it.

So, Oxy Stock Buy or Sell? Overall it will be a roller-coaster ride for Oxy stock along with crude prices and if someone like Warren Buffett believes in oil prices in long term, Occidental presents a great opportunity.

OXY stock forecast

Vineet Agarwal

Note: Crowdwisdom360 collates Predictions and data from all over the net and has no in-house view on the likely trends in the Stocks or Crypto Coins. Please consult a registered investment advisor to guide you on your financial decisions

 



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