BofA Names Occidental Top Oil Stock Pick, Sees 70% Upside In 2021

Occidental Petroleum Corporation OXY is among the most levered stocks to an oil recovery, according to BofA Securities.

The Occidental Analyst: Doug Leggate maintained a Buy rating for Occidental Petroleum, with a price target of $29.

The Occidental Thesis: The company’s stock came under significant pressure and has “paid the price” for its capital structure being “heavily weighted towards debt,” Leggate said in the note.

He added, however, that Occidental Petroleum will benefit due to its oil leverage now that there is upside to oil prices.

The analyst noted the company had extended its debt maturities through 2023, enabling a transition in its investment case “from anxiety over its balance sheet to a focus on world class operations with the lowest capital intensity of the US oils and one of the highest free cash margins in the industry.”

“In recent months strong operating performance has been overshadowed by concerns over underlying portfolio declines and managements suggestion that its corporate break-even was still in the high $30s WTI. On closer examination we believe it is being conservative on both measures,” Leggate wrote in a note.

OXY Price Action: Shares of Occidental Petroleum had risen by 7% to $18.09 at the time of publication Wednesday.