Evercore upgraded OXY to Outperform on faster deleveraging and higher oil view. Shares flat. With flat production and carbon capture cash burn, stock needs a crude rally. Earnings Aug 7.
Alpha Score of 52 reflects moderate overall profile with strong momentum, moderate value, poor quality. Based on 3 of 4 signals – score is capped at 90 until remaining data ingests.
Evercore ISI upgraded Occidental Petroleum to Outperform from In Line on Tuesday, citing faster-than-expected debt reduction and a stronger oil-price outlook. The stock did not move. OXY shares closed flat on a day crude gained nearly 2%.
Evercore's analyst said the deleveraging timeline has pulled forward by roughly six months after the company used free cash flow to pay down debt tied to the CrownRock acquisition. A faster path to investment grade lowers Occidental's cost of capital and widens the return spread on new Permian wells. Debt reduction is already priced into the stock at current levels.
Occidental guided second-quarter output at 1.23 million to 1.27 million barrels of oil equivalent per day, roughly flat sequentially. Without volume growth, the bull case rests entirely on crude staying above $70.
The upgrade comes alongside a higher forward oil-price assumption from Evercore, which now sees WTI averaging $78 in 2025. OXY trades at 11.7 times forward earnings, a multiple that already assumes a constructive oil market.
A separate risk is the company's carbon-capture business. Occidental has spent heavily on direct-air capture infrastructure in the Permian. The technology does not generate operating cash flow yet and will not for years. Evercore's upgrade did not address that cash burn, which runs at roughly $500 million a year by the company's own accounting.
Free cash flow yield sits at about 8% at current oil prices. The dividend, while small, has room to grow. None of this is new information. The stock needs a production beat or a sustained crude rally to break out of the Alpha Score 44 range.
Occidental reports second-quarter earnings on Aug. 7.
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