Occidental Petroleum Stock (OXY) Under Pressure As Earnings Await

Occidental Petroleum Corporation (NYSE: OXY) finds itself at a critical juncture as it prepares to release its next earnings report tomorrow. The stock, currently trading at over $41, has faced significant headwinds throughout the year, despite strategic moves aimed at bolstering its financial health. Year-to-date, the stock price has decreased by approximately 16.39%, a substantial decline that has markets closely watching the upcoming earnings announcement.

nalyst projections for the upcoming earnings report for OXY indicate an average earnings per share (EPS) estimate of $0.49, down from $1 reported in the same period last year. Revenue is expected to average around 6.74 billion, which reflects a year-over-year sales decline of approximately 5.78%.

A key factor influencing OXY's recent performance has been its strategic decision to sell its chemical subsidiary, OxyChem, to Berkshire Hathaway for $9.7 billion. This move, announced on October 2nd, is intended to strengthen Occidental's balance sheet, with $6.5 billion of the proceeds earmarked for debt reduction. The company aims to reduce its principal debt below $15 billion, a goal that could significantly improve its financial flexibility.

However, the market reaction to the OxyChem sale was initially negative. Despite BofA Securities raising its price target for Occidental from $44.00 to $47.00, the stock dropped 7% on the news, erasing approximately $3.3 billion in market capitalization. This reaction highlights concerns about the company's future growth prospects without the steady cash flow generated by OxyChem.

Occidental has made notable progress in reducing its debt burden, successfully repaying $7.5 billion since July 2024 through asset divestitures and strong operational cash flow. This debt reduction is expected to lower annual interest expenses by about $410 million, providing a boost to the bottom line.

Despite these positive developments, analysts remain cautious about Occidental's near-term earnings potential. Capital One Financial, for example, lowered its third-quarter 2025 earnings per share estimate from $0.55 to $0.45, reflecting concerns about the company's short-term profitability. The consensus recommendation among analysts is a “hold” position, with an average price target of $50.13, representing a potential upside of approximately 21.68% from the current price.

Analyst opinions on Occidental have been mixed. HSBC Global Research upgraded the stock from a “hold” to a “strong-buy” rating, raising the price objective from $48.00 to $55.00. Conversely, Wells Fargo reduced its price target to $46.00 from $47.00, maintaining an Equal Weight rating, citing factors such as a higher share count and lower Gulf of Mexico production. This divergence in analyst sentiment reflects the uncertainty surrounding the company's future prospects.

Occidental's past actions, such as the warrant exercise offer in March, demonstrate its proactive approach to managing its balance sheet. The offer, which aimed to generate approximately $1.6 billion in gross proceeds, underscores the company's commitment to reducing debt and improving its financial position.nalyst projections for the upcoming earnings report for OXY Stock indicate an average earnings per share (EPS) estimate of 0.49, down from 1 reported in the same period last year. Revenue is expected to average around 6.74 billion, which reflects a year-over-year sales decline of approximately 5.78%.

While the prevailing sentiment seems to be one of cautious optimism tempered by concerns about short-term profitability, perhaps the market is underestimating the long-term strategic value of Occidental's moves. The sale of OxyChem, while initially unpopular, could allow management to focus on its core competency: oil and gas exploration and production.

Furthermore, the debt reduction efforts, while lauded, might be masking a more significant shift towards a leaner, more efficient operating model. It is possible that the market is too focused on quarterly earnings and short-term oil price fluctuations and failing to recognize the potential for Occidental to emerge as a stronger, more resilient player in the energy sector in the long run. The CrownRock acquisition, in particular, could prove to be a game-changer if oil prices eventually recover.

As Occidental Petroleum prepares to release its next earnings report, markets will be closely scrutinizing the company's financial performance, debt reduction progress, and outlook for the future. The report will provide crucial insights into whether Occidental can overcome the challenges it faces and deliver on its long-term potential.