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Warren Buffett Keeps Buying OXY Stock. Should You?


  • Warren Buffett recently bought 4.3 million shares of Occidental Petroleum (OXY) stock.
  • The shares were purchased at average prices ranging between $56.84 and $59.84.
  • OXY stock is up more than 90% year-to-date (YTD).
close up of oil pipelines at sunset
Source: Shutterstock

Occidental Petroleum (NYSE:OXY) is back in the spotlight today following yet another purchase from Berkshire Hathaway’s (NYSE:BRK-A, BRK-B) Warren Buffett. Meanwhile, the price for a barrel of crude oil is up by over 25% year-to-date (YTD).

A Form 4 disclosed that Buffett purchased 4.3 million shares of OXY stock between July 11 and July 13. Buffett is required to file this form because his 10%-plus stake in Occidental classifies him as a company insider. The legendary investor purchased the shares at average prices ranging between $56.84 and $59.84.

After the purchase, Buffett now owns a total of 179.74 million shares, making Berkshire the largest shareholder in OXY stock by a wide margin. Berkshire also owns 83.85 million warrants to purchase common stock. These warrants carry a conversion price of $59.62 and will be exercisable at the “applicable holder’s option.”

Still, investors should be cautious of following Buffett’s moves. No investor has a perfect track record and Buffett may have a much longer time frame than the usual retail investor. With that in mind, let’s take a look at how Wall Street analysts view this oil and natural gas company.

3 Wall Street Analysts Chime In on OXY Stock

  • Stifel has a price target of $84 on OXY stock. Analyst Michael Scialla is encouraged by Occidental’s “best-in-class” 2022 expected free cash flow (FCF) yield of 26%. Scialla also says investors under-appreciate the company’s emerging low carbon business. He says the “pace of offset market expansion could surprise investors” as well. For the future, the analyst would like to see the company conduct share repurchases and deleverage the balance sheet.
  • Goldman Sachs has a price target of $70. Analyst Neil Mehta downgraded OXY to “neutral” following a stretch of outperformance. Mehta says the company’s FCF outlook is still attractive. However, het also sees “less differentiated FCF to current EV” due to Occidental’s outperformance. Mehta recommends buying ConocoPhillips (NYSE:COP) following a large pullback in COP stock.
  • Morgan Stanley gives OXY a price target of $52. Analyst Devin McDermott reiterated his target following a company presentation on its low carbon business. The analyst believes OXY is “uniquely positioned” to take advantage of commercial carbon capture opportunities. Developing new technologies does carry risk, but McDermott believes Occidental’s plan is “well thought out.” The potential of its low carbon business is not reflected in the price target.
  • Finally, OXY stock carries an average price target of $75.84 among 24 firms covering shares, according to Yahoo! Finance.

On the date of publication, Eddie Pan did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Eddie Pan specializes in institutional investments and insider activity. He writes for InvestorPlace’s Today’s Market team, which centers on the latest news involving popular stocks.

Article printed from InvestorPlace Media, https://investorplace.com/2022/07/warren-buffett-keeps-buying-oxy-stock-should-you/.

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