Occidental Petroleum Shares Drop About 4% as Q3 Earnings Disappoint

Occidental Petroleum, an international oil & gas exploration and production company, reported a worse-than-expected loss in the third quarter as the ongoing COVID-19 pandemic hammered demand for fuel, sending shares down about 4% in after-hours trading on Monday.

The oil and gas producer said its net loss came in at $3.8 billion, or $4.07 per diluted share, and an adjusted loss attributable to common stockholders of $783 million, or $0.84 per diluted share. That was worse than the market expectations for a loss of $0.73 per diluted share.

“Occidental Petroleum (OXY) beat 3Q FCF estimates on 38% lower capex and better results from chems and midstream, while production was in line with the street. FY20 capex is unchanged, as 4Q spend is guided 24% above ests driven by activity additions, and adjusted production guide is 6% below ests, hurt by GOM downtime/Permian timing, even as OXY adds another 15 wells in the Permian this year and 1 rig in the DJ,” said David Deckelbaum, equity analyst at Cowen and Company.

Occidental Petroleum shares plunged about 4% to $11.75 in after-hours trading on Monday; the stock is down around 70% so far this year.

Occidental Petroleum Stock Price Forecast

Thirteen equity analysts forecast the average price in 12 months at $12.82 with a high forecast of $19.00 and a low forecast of $8.00. The average price target represents a 4.82% increase from the last price of $12.23. From those 13 analysts, three rated “Buy”, eight rated “Hold” and two rated “Sell”, according to Tipranks.

Morgan Stanley gave the base target price of $11 with a high of $29 under a bull-case scenario and $1 under the worst-case scenario. The firm currently has an “Equal-weight” rating on the oil & gas exploration company’s stock. UBS lowered the stock price forecast to $10 from $12 and Mizuho decreased the target price to $11 from $16.

Several other analysts have also recently commented on the stock. Occidental Petroleum had its price target dropped by equities research analysts at Bank of America to $29 from $30 in Sept. The firm currently has a “buy” rating on the oil and gas producer’s stock. JP Morgan cuts target price to $12.50 from $13; Simmons Energy lowered the target price to $12 from $19; Capital One Securities cuts target price by $2 to $12.

Analyst Comments

“Leverage remains elevated, but maturity outlook is manageable. Occidental Petroleum (OXY) has continued to extend maturities following the recent opening of the high-yield debt market. High-quality assets and differentiated exposure to a low carbon future. In addition to operating high-quality upstream assets, OXY has achieved peer-leading emission reductions and maintains investments in low carbon technologies,” said Devin McDermott, equity and commodities strategist at Morgan Stanley.

“Reasonable valuation. Since the oil price collapse on March 6, OXY has meaningfully underperformed large-cap and integrated peers. We now forecast an above-average FCF yield and see a more balanced risk-reward,” McDermott added.

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