Signal stock

OXY Stock Forecast: OXY Stock will reach new heights?




OXY Stock Forecast: Expected to trade between $49 and $57. The overall recommendation is Buy

OXY Stock Forecast: Latest Price

Western Oil Company Performance Chart

Action name

5 days

1 month

6 months

1 year

17.48%

39.55%

124.33%

96.30%

OXY Stock Forecast: Support and Resistance

Source

Support

Resistance

Recommendation

$43.79 (S3)

$58.41 (R1)

To buy

$43.80(S3)

$58.42(R1)

To buy

Oxy Stock Forecast: Google Trends

Also Read: Plug Stock Forecast

Oxy Stock Forecast: Bullish Case

  • Rising crude oil prices- The world has been in turmoil for two weeks, thanks to the Russian-Ukrainian war. In this world of globalization, no event affects just one or two countries and this war has positively affected crude oil prices, both Brent crude and West Texas Intermediate (WTI) crude. Crude prices rose above $130 a barrel, leading to new buying in Occidental Petroleum Corporation. Over the past month, Oxy stock has rebounded 34%, outperforming the S&P 500, which is down 7.05% as of 9.03.2022. Occidental is engaged in the exploration and production of oil and natural gas. As prices are expected to rise in the near future, or at least not fall below $100 per barrel, the profitability and incomes of oil-producing countries will certainly increase proportionally.
  • US sanctions on Russian oil and gas imports- Russia is one of the largest producers and exporters of oil and natural gas. Recently, US President Joe Biden announced new sanctions against Russian oil and natural gas imports following the Russian invasion of Ukraine. This step will not increase crude oil prices and keep them inflated in the near future, but also offers local suppliers a golden opportunity to capture market share. Occidental Petroleum’s major production is around the Permian Basin, which, together with the Shale Basin, can increase production to meet local US demand and create lasting impact in these challenging times.
  • Fourth quarter results better than expected – Occidental announced fourth quarter 2021-22 results on May 24and February 2022. The results far exceeded market expectations on several fronts. Earnings per share were $1.48, while expectations were for $1.10 per share. It reported a loss of $0.65 per share in the same quarter last year. Fourth-quarter revenue was $7.79 billion, compared to $4.56 billion in the same quarter last year. The company pumped an average of 1,180,000 barrels of oil per day in 2021, compared to 1,130,000 barrels in 2020. All of this signals an increase in demand and supply, coupled with increased profitability and revenue.
  • Planning to reduce debt and reward investors- It’s one thing to grow revenue/profitability in a favorable market and another to put the money to good use. One good thing about Occidental is that it uses excess cash to pay down its long-term debt. A news report says the company has decided to pay off $2.5 billion in junk listed debt. However, the good news doesn’t stop there and the board also approved $0.13 in quarterly dividends for investors, up from $0.01 paid out last time. That’s a whopping 1200% dividend increase. A $3 billion share buyback program was also approved. These three stages signal different positive management intentions. On the one hand, reducing debt improves the balance sheet, the dividend is a reward for loyal shareholders, and the buyback of shares shows the confidence of executives in their own company. The company seems to be heading in the right direction.
  • Berkshire Hathaway owns $5 billion stake in Occidental Petroleum – In a recent SEC filing, it is revealed that someone from Berkshire Hathaway made a new purchase of 61 million shares of Occidental, bringing total ownership to 91.2 million shares. Along with the shares, she also holds warrants to buy 84 million shares at a price of $59.62. Notably, Berkshire received those warrants in exchange for a $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 investor morale and is big positive news for Oxy stocks.

Oxy Stock Forecast: Case of the Bear

  • The Challenges of Accelerating Oil Production- As noted above, US sanctions on Russian oil and natural gas imports present Occidental with an opportunity to increase production, but it looks like it won’t be an easy task. The supply chain, not only in the oil industry, but all over the world, is not supportive of increased production at this time. According to Vicki Hollub, president and CEO of Occidental Petroleum Corporation, part of the difficulty also lies in renovating wells that have exceeded their peaks. Labor shortages and the supply of necessary raw materials are also expected to hamper the increase in the oil production target. According to her, the additional production cannot take place right away and American producers were only ready to maintain oil production in 2022.
  • No returns in the past five years- The 10and In March 2017, Oxy stock was at $62.60 and the rally continued until mid-2018 when it reached $86 per share on March 18.and May 2018. But since then, Occidental’s performance has been dismal. During the pandemic, it bottomed out at $10 on the 23rdrd October 2020. Although it recovered from this level to $57.27 by 11:52 a.m. on the 9and March 2022, but this signals a strong dependence on oil prices in the near future. As the uncertainties hanging over the world dissipate, crude prices are expected to crash and, with that, Oxy’s stock prices. So, apart from company fundamentals, there are so many external factors that decide the future price of a stock and it is not good for an investor.

Oxy Stock Forecast: Buy or Sell Oxy Stock?

There’s so much to love about Occidental Petroleum Corporation to begin with. The fundamentals of the company are good, with the exception of a large debt of around $30 billion at present. The company wants to bring that amount down to $20 billion by the end of 2022 and the $2.5 billion payout is a step in that direction. Moreover, rising oil prices are supporting the company and providing it with an opportunity, but it is unclear how long this opportunity will last and whether Occidental is ready to take advantage of it.

So, buy or sell Oxy shares? All in all, it will be a roller coaster ride for Oxy shares with crude prices and if someone like Warren Buffett believes in long-term oil prices, Occidental presents a great opportunity.

OXY Stock Forecast

Vineet Agarwal

Note: Crowdwisdom360 gathers forecasts and data from all over the net and has no internal views on likely stock or cryptocurrency trends. Please consult a registered investment advisor to guide you in your financial decisions