Goldman Sachs Resumes Occidental Petroleum (OXY) at Sell

Goldman Sachs resumed coverage on Occidental Petroleum (NYSE: OXY) with a Sell rating and a price target of $71.00. Analyst Brian Singer noted shares are trading at an above peer-average multiple, despite falling returns/production/dividend growth.

"We believe that OXY shares have been a core holding in the past for investors looking for IDO exposure given its differentiated returns, dividend growth and free cash yield. We believe OXY management will be disciplined with capital spending in this lower oil price environment, and we see favorable FCF vs. peers. However, we rate OXY shares Sell for three reasons. (1) We see rising capital intensity as OXY seems relatively early in delineating its Permian position, contributing to lower returns. (2) Historically, OXY has seen below-average Permian well performance despite what appears to be good acreage, and we see an inflection taking time. (3) OXY retains a premium valuation vs. its history and vs. peers which we do not view as justified given weakening fundamentals (growth, returns, FCF, dividend growth)," said Singer.

For an analyst ratings summary and ratings history on Occidental Petroleum click here. For more ratings news on Occidental Petroleum click here.

Shares of Occidental Petroleum closed at $74.22 yesterday.

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