Shares of Occidental Petroleum Corp. OXY climbed 2.3% in premarket trading Tuesday, after the oil and gas exploration and production company was upgraded at TD Cowen, citing a “superior” risk-reward balance. Analyst David Deckelbaum lifted his rating to outperform from market perform and boosted his stock price target to $70 from $63. He listed a number of reasons for his bullishness, such as “superior” exposure to crude oil pricing, capital structure shifts, a favorable free cash flow yield, well productivity and “captive buying support” from Warren Buffett’s Berkshire Hathaway Inc. BRK.BBRK.A, which has been steadily increasing its stake in the company since early 2022 to be Occidental’s largest shareholder. Deckelbaum noted that Berkshire owns 26% of Occidental’s shares outstanding, and has about 10% further exposure through warrants to buy stock. “Asset and inventory quality is a key focal point for investors in a range-bound commodity tape where we see a superior profile for OXY, but also note ideal exposure to higher oil pricing in the event that macro views of an under-supplied situation in 2H23 emerge,” Deckelbaum wrote in note to clients. The stock has lost 3.9% over the past three months, while crude oil futures CL.1 have dropped 8.5% and the S&P 500 SPX has gained 3.6%.
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