Shares of Occidental Petroleum Corp.
surged 1.7% in premarket trading Friday, after Susquehanna analyst Biju Perincheril said it’s time to buy into the oil and natural gas exploration and production company again, citing confidence in an oil price recovery. Perincheril raised his rating to positive, after downgrading it to neutral on March 16, and boosted his stock price target by 64% to $18, from $11. Perincheril is “increasingly confident” that crude oil prices will rise to about $50 per barrel by the end of 2021 and into 2022 on the back of improving economic data points and recent positive news on a potential COVID-19 vaccine. “[Occidental’s] large debt burden has been a major headwind for the stock this year, but we see a line of sight to an improving leverage profile through enhanced free cash flow generation from higher oil prices,” Perincheril wrote in a note to clients. Crude oil futures
were up 0.7% at $42.20 in recent trading. Perincheril also believes Occidental’s target for $2 billion to $3 billion in asset sales could increase if the oil outlook keeps improving, which would speed up deleveraging efforts. The stock has tumbled 67.6% year to date through Thursday, while the SPDR Energy Select Sector ETF
has shed 40.0%, crude futures have lost 31.0% and the S&P 500
has gained 10.9%.