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3 Reasons Occidental Petroleum Will Gush Higher in 2025
OXYOXY(OXY) MarketBeat·2025-02-20 12:09

Core Viewpoint - Occidental Petroleum's stock price struggles are expected to end, with a strong rebound anticipated due to various factors including financial results, balance sheet improvements, and Warren Buffett's investment activity [1] Financial Performance - Occidental's Q4 results show a consolidated revenue of 6.48billion,downover96.48 billion, down over 9% year-over-year and missing consensus estimates by 500 basis points, despite increased production [2] - Adjusted earnings improved by over 500 basis points due to operational enhancements and debt reduction, indicating stronger margins moving forward [3] Cash Flow and Balance Sheet - The company reported 3.6 billion in operating cash, which constitutes more than 55% of revenue, with free cash flow at 21.6%, enabling significant debt reduction and achieving a near-term target of 4.5billion[4]−Thebalancesheetreflectsincreasedcash,property,andtotalassets,leadingtoa124.5 billion [4] - The balance sheet reflects increased cash, property, and total assets, leading to a 12% rise in equity, with expectations for further equity gains in 2025 [5] Dividend Outlook - Occidental's dividend yield is nearly 2% at a stock price of 49, with expectations for robust growth, including a projected 9% increase in 2025, representing only 30% of earnings [6] - The company is anticipated to accelerate dividend increases to pre-pandemic levels, potentially exceeding 100% of the 2025 payment [7] Market Conditions - Oil prices are currently a headwind, with WTI trading at the lower end of its range, but signs suggest a potential price rebound that could positively impact Occidental's revenue and cash flow [8] Analyst Sentiment - Analysts have reset their sentiment, predicting a 25% upside from critical support levels, with a consensus rating of Hold and a bullish bias due to a high percentage of Buy ratings [9][10] - The critical support target is around 49,whichalignswithpreviousresistancelevelswhenBerkshireHathawaybeganpurchasingshares[10]TechnicalIndicators−Technicalsignals,includingMACDandstochasticindicators,suggestastrongbottomandpotentialforsubstantialupwardmovement,withacriticalresistancetargetnear49, which aligns with previous resistance levels when Berkshire Hathaway began purchasing shares [10] Technical Indicators - Technical signals, including MACD and stochastic indicators, suggest a strong bottom and potential for substantial upward movement, with a critical resistance target near 51.85 expected to be reached before the FQ1 2025 earnings release [11][12]