Oxy Petroleum poised for Buffett bid, analyst says in raising PT to Street-high $93

Warren Buffett And BofA CEO Brian Moynihan Speak At Georgetown University

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There's a "good chance" that Warren Buffett's Berkshire Hathaway (BRK.A) (BRK.B) will buy Occidental Petroleum (NYSE:OXY), Truist analyst Neal Dingmann said on Thursday, after Berkshire bought another 9.6M shares in the oil company to raise its common stock ownership stake to 16.3%.

Dingmann, who maintained a Buy rating on the stock, has raised his price target to a Street-high $93, said he anticipates a bid once the company becomes investment grade, and Occidental (OXY) is "quickly on its way to becoming IG as debt could soon go to less than $20B (currently $25B +$10B preferreds)," perhaps even this year, "given the material continued FCF/debt repayment among other positive drivers."

The analyst expects Occidental (OXY) will continue to "run a relatively maintenance capital type of program focusing on continued average free cash flow of greater than $3B quarterly."

Citing Occidental's (OXY) 60% ratio of debt plus preferred share to capital, Seeking Alpha contributor Dilantha De Silva believes the chance of Buffett going for an outright acquisition of the company is unlikely.

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