It could be time to take some income in Occidental Petroleum after the inventory’s huge rally this 12 months, in line with Goldman Sachs. Analyst Neil Mehta downgraded shares of Occidental Petroleum to impartial from purchase, saying in a Monday observe that its inventory soar appears exuberant, particularly when put next with friends. Vitality shares have broadly benefitted from the rise in oil costs this 12 months. Nevertheless, shares of Occidental Petroleum are up 110% this 12 months, whereas the Vitality Choose Sector SPDR Fund is up simply 31% over the identical time interval, the observe stated. “Since being added to the Purchase checklist on Might twenty seventh, 2021, OXY is +141% vs. the XLE +43%, and the S & P 500 -7%, with the unfold pushed by stability sheet enchancment following the rally in oil costs and higher recognition of OXY’s enticing Upstream/Chemical belongings,” Mehta wrote. The analyst believes that different vitality corporations are beginning to look extra compelling. Mehta famous that large-cap shares corresponding to Exxon Mobil, ConocoPhillips, Hess, Pioneer Pure Sources all have about 40% upside to their 12-month goal costs after incorporating financial danger. In distinction, Occidental Petroleum has about 17% upside to Goldman Sachs’ 12-month goal value of $70 per share, the observe stated. “Whereas we proceed to see a sexy FCF outlook for OXY that may permit for additional stability sheet enchancment and higher capital returns (together with increased base dividends + share repurchases), we see much less differentiated FCF to present EV following the outperformance relative to friends. Shares of Occidental Petroleum are down greater than 3% in Monday premarket buying and selling. —CNBC’s Michael Bloom contributed to this report.
