Occidental Petroleum upgraded to "overweight"

05/26/03 - J.P. Morgan Securities

NEW YORK, May 23 (New Ratings) — Analyst David J Wheeler of JP Morgan upgrades Occidental Petroleum (OXY: NYSE) from "neutral" to "overweight."

Shares of Occidental Petroleum, an integrated oil and gas sector company, are currently trading at $32.03.

According to JP Morgan's research note published on May 23, Occidental Petroleum has emerged as a high quality integrated oil major with robust fundamentals and a stable assets base. The analyst mentions that the company has successfully executed its acquisition and restructuring exercises into impressive profit margins and robust investment returns.

The analyst expects the robust results at the company's core US operations to effectively offset any potential risks associated with the production shortfall in 2003. In addition, the new Oman gas project is expected to substantially boost the company's production growth outlook in the long-term, states the analyst. JP Morgan believes that the company's stock is attractively valued at the current level, despite the strong share price appreciation this year. The analyst expresses concern, however, regarding the risks associated with Occidental Petroleum's high leverage in oil prices and the exposure to the politically unstable Mid-East region.

The EPS estimate for FY03 is $3.70, while the EPS estimate for FY04 has been raised from $3.09 to $3.16. The P/E estimates for FY03 and FY04 are 8.6x and 10.1x, respectively.

JP Morgan upgrades Occidental Petroleum from "neutral" to "overweight."