Warren Buffett Continues to Invest in Occidental Petroleum: Will Upcoming Q4 Earnings Validate His Strategy?

Occidental Petroleum Corp (OXY) is set to announce its fourth-quarter earnings on Tuesday, with markets anticipating earnings per share (EPS) of 70 cents and revenues reaching approximately $7.05 billion.

Over the last year, the stock has seen a decline of 19.31%, with a minor drop of 3.51% year-to-date.

Warren Buffett's Ongoing Investments

As Occidental Petroleum approaches its fourth-quarter earnings report, the focus remains on Warren Buffett and his ongoing investments in the company. Berkshire Hathaway, Buffett's investment firm, currently holds a remarkable 28.24% stake in Occidental. This move comes despite the stock experiencing a significant decrease of over 30% from its peaks in April.

Buffett's unwavering commitment to Occidental reflects his long-term investment philosophy, even amidst the prevailing market concerns primarily related to falling crude oil prices. The company's initiatives for debt reduction and advancements in carbon capture technology may present a more robust long-term growth outlook.

Buffett's consistent buying of Occidental shares, along with his ownership of warrants for additional shares, prompts speculation among investors about whether he identifies undiscovered value within the stock that the broader market is missing.

Now, let’s delve into the current stock positions for Occidental and how they align with Wall Street's expectations.

Bearish Signals for Occidental Stock

Currently, Occidental's stock price sits at $48.06 and is trading below several key indicators, specifically its five-day, 20-day, and 50-day exponential moving averages (EMA), indicating ongoing selling pressure and a potential bearish trend.

Chart created using Benzinga Pro

Additionally, the stock is under its 20-day simple moving average (SMA) of $48.56 and 50-day SMA of $48.89, further emphasizing a short-term downward trend. Considering it is also below the 200-day SMA, which stands at $54.94, signals broader weakness in the stock’s performance in the longer term.

The momentum indicators present a mixed analysis. The Moving Average Convergence Divergence (MACD) is currently at a negative 0.54, confirming the overall bearish sentiment. In contrast, the Relative Strength Index (RSI) reads at 45.97, which indicates the stock is under pressure without entering oversold territory yet.

Key levels for technical analysis include the eight-day SMA at $47.73, which is critical for bullish signals. A recovery above the 20-day SMA could suggest a possible trend reversal for the stock.

However, if the negative trend continues, further declines could test lower support levels.

Positive Outlook from Analysts

Analyst Ratings & Consensus Estimates: Currently, analysts have a consensus rating of Neutral on Occidental's stock, with an average price target set at $62.10. Up-to-date ratings from institutions such as Goldman Sachs, Truist Securities, and Piper Sandler indicate a potential upside of about 5% for the stock, with an average target price of $51.33.

Price Movement: On the last trading day, Occidental’s stock finished at $48.06, marking a slight increase of 0.38%.

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Buffett, Occidental, Earnings