Goldman Sachs upgrades Occidental Petroleum stock rating on debt reduction outlook

Goldman Sachs upgraded Occidental Petroleum (NYSE:OXY) to a "Buy" rating from "Neutral" on Thursday, raising its price target to $69 from $63. The investment firm cited several key factors for this upgrade, including the company's differentiated advanced recovery approach, its strong outlook for debt reduction, and potential dividend growth. Occidental has a solid track record of raising its dividend for four consecutive years and maintaining payments for an impressive 53 years in a row.

In addition to the upgrade, Goldman Sachs highlighted the company's self-help initiative aimed at achieving $4.0 billion in cash flow improvement by 2030. This initiative, coupled with Occidental's attractive risk-reward ratio given its discounted valuation, presents a compelling opportunity for investors. The firm noted that the oil exploration and production coverage at Goldman Sachs experienced strong year-to-date share price growth of 34% amidst an elevated oil pricing environment.

Occidental shares have indeed risen by 34% year-to-date, aligning with Goldman Sachs' broader coverage in the oil exploration and production sector. The company's capital efficiency improvements and deleveraging efforts under its new chief executive have contributed to these positive developments. This focus on financial restructuring has resonated throughout the market, supporting Occidental's upward trajectory.

Recently, Occidental Petroleum reported strong second-quarter 2026 earnings, surpassing expectations. Adjusted earnings per share reached $2.40, compared to Wall Street's forecast of $1.86. Revenue also exceeded estimates at $8.33 billion versus the expected $7.22 billion. The company's robust performance was bolstered by a significant surge in free cash flow, which hit $3.0 billion, marking the highest level since the third quarter of 2022.

Moreover, Occidental has been actively reducing its debt while simultaneously increasing its dividend payments.

Other analysts are also taking notice of Occidental's strategic moves. For instance, Wells Fargo recently raised its price target for Occidental Petroleum to $82 from $79, maintaining an Overweight rating. This move was influenced by the company's capital allocation strategy and operational transparency. Meanwhile, data from UBS Evidence Lab indicates a rise in U.S. oil and gas drilling activity, particularly in the Permian Basin, signaling a dynamic period for the energy sector overall.