On Tuesday, Citi updated its outlook on Ovintiv Inc. (NYSE:OVV), increasing the stock's price target to $64 from the previous $58, while keeping a Buy rating on the shares. The adjustment follows a comprehensive review of the company's financial model, accounting for first-quarter market conditions and projections.
Ovintiv's production estimates for the first quarter have been slightly reduced to approximately 568 thousand barrels of oil equivalent per day (mboe/d), attributed to a lighter-than-expected Turn-In-Line (TIL) schedule. This figure aligns with the consensus estimate. Citi also forecasts a Cash Flow Per Share (CFPS) of $3.68 for the quarter, which is consistent with the market consensus.
The firm anticipates a ramp-up in TIL activity, particularly in the third quarter, which could affect second-quarter volumes. Citi's projections for the second quarter are approximately 7 mboe/d lower than the consensus. Additionally, capital expenditures for the second quarter are estimated to be around $620 million, which includes the cost of adding a sixth Permian rig. This suggests that investor expectations for second-quarter Free Cash Flow (FCF) may need to be moderated.
Despite these adjustments, Ovintiv's production guidance for the second half of 2024 remains unchanged. The company's forecast for the full year includes the expected benefits from Permian design improvements and enhanced well performance, maintaining the annual production target of approximately 205 mboe/d of oil and condensate. The full-year capital expenditure guidance also remains steady at about $2.3 billion.
InvestingPro Insights
As Ovintiv Inc. (NYSE:OVV) garners attention with Citi's updated price target, real-time data from InvestingPro provides further context for investors evaluating the stock's potential. Ovintiv's market capitalization stands at a robust $14.89 billion, and the company boasts a compelling price-to-earnings (P/E) ratio of 6.91, indicating that the shares may be undervalued relative to earnings. Adjusting for the last twelve months as of Q4 2023, the P/E ratio remains attractive at 6.94. Additionally, Ovintiv's revenue for the same period was substantial at $10.66 billion, though it's important to note a revenue decline of 25.25% year-over-year, which could reflect market challenges or strategic shifts.
InvestingPro Tips highlight that Ovintiv has raised its dividend for 5 consecutive years, signaling confidence in its financial health and a commitment to returning value to shareholders. Furthermore, 7 analysts have revised their earnings projections upwards for the upcoming period, suggesting a positive outlook on the company's future performance. For investors seeking detailed analysis and more tips like these, InvestingPro offers a wealth of insights, including additional tips related to Ovintiv, which can be accessed with a special offer. Use coupon code PRONEWS24 for an extra 10% off a yearly or biyearly Pro and Pro+ subscription.
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