Core Viewpoint - Despite Warren Buffett's confidence in Occidental Petroleum, the company's stock has been struggling, leading to questions about its future performance and investment potential [1][3]. Group 1: Stock Performance - Occidental Petroleum's stock price has declined, closing at $47.94 on March 21, 2025, which is down more than 3% year-to-date and approximately 21% below Buffett's initial entry price of $60 [2]. - The company has failed to deliver expected returns compared to sector peers, raising concerns about whether Buffett's investment is a misstep or if patience is required [3]. Group 2: Financial Fundamentals - Occidental achieved a $4.5 billion debt repayment target seven months ahead of schedule in Q4 2024, following a $12 billion acquisition of CrownRock in 2023 [4]. - The company reported $3.1 billion in cash flow and $1.4 billion in free cash flow for the same quarter, alongside divesting upstream assets for $1.2 billion, which strengthened its balance sheet [6]. - Total proved reserves increased to 4.6 billion barrels of oil equivalent (BOE) from 4 billion the previous year, with a reserves replacement rate of 230% in 2024 [7]. Group 3: Dividend and Investment Appeal - Occidental announced a 9% increase in its quarterly dividend to $0.24 per share, payable on April 15, 2025, appealing to income-focused investors [8]. - The company's investment in direct-air-capture technology enhances its position in carbon reduction, exemplified by a deal with Microsoft for removal credits [9]. Group 4: Analyst Perspectives - Raymond James downgraded Occidental from "Strong Buy" to "Outperform" and lowered its price target to $64, citing weaker oil prices and recent stock performance [11]. - Wall Street analysts project a 21% upside for OXY stock over the next 12 months, with an average price target of $58 and a 'Hold' rating [11]. Group 5: Future Outlook - Despite short-term struggles, the fundamentals suggest a solid chance for Occidental's stock to rally, with Buffett's continued confidence indicating potential for a rebound in 2025 [12].
Is it time to dump this Warren Buffett energy stock?