Occidental Petroleum: Limited Upside Makes This A Pass

Summary

• Occidental Petroleum completed a $12 billion acquisition of CrownRock, but shares have dropped 24.2% in recent months while the S&P 500 rose 14.5%.
• Management's focus on debt reduction, including asset sales, adds complexity to an already complex situation.
• The firm should generate significant cash flow moving forward, but this doesn't make it an appealing prospect at this point in time.
• Despite some growth potential, Occidental's current valuation and leverage ratios suggest limited upside, making a 'hold' rating appropriate.