Truist upgrades Occidental Petroleum to buy, says oil stock can surge more than 50%
Shares of Occidental Petroleum still have significant upside as high oil prices make the company a major cash producer, according to Truist. Analyst Neal Dingmann upgraded Occidental to buy from hold, saying Monday in a note to clients that the oil stock's improving balance sheet could lead to greater returns for shareholders. "We forecast OXY's record [free cash flow] to continue combined with asset monetizations resulting in [less than two times] leverage by potentially early next year. As such, we believe the company will soon discuss plans to return its quarterly dividend to 2019/2020 levels along with the possibility of an additional variable dividend and/or stock repurchase program," Dingmann wrote. Truist hiked its price target on Occidental to $50 per share from $35 per share. That target is the highest among major Wall Street firms, according to FactSet, and is 58% above where the stock closed Friday. Shares of Occidental have already soared this year, climbing more than 80%. The stock has been boosted by the rising price of oil, with U.S. benchmark West Texas Intermediate crude climbing above $83 per barrel. Additionally, the company's low-carbon initiatives could start to perform well as early as next year, Truist said. "OXY's decarbonizing operations continue to gain steam capitalizing on its notable infrastructure in place/under development. We forecast the upstream and chemicals segments could see record earnings/cash flow in the coming quarters," Dingmann said. —CNBC's Michael Bloom contributed to this report.

Occidental Petroleum Jay L. Clendenin | Los Angeles Times | Getty Images