Ovintiv Inc. (OVV) Update - Sept 3

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dan_s
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Joined: Fri Apr 23, 2010 8:22 am

Ovintiv Inc. (OVV) Update - Sept 3

Post by dan_s »

In this article that was published on 9-2-2022, Ovintiv is listed as a Top Ten Pick by a very successful hedge fund.
https://finance.yahoo.com/news/top-10-s ... 51504.html

Copied from the article:
The unique sounding Ovintiv Inc. (NYSE:OVV) is a new addition to the top 10 stock picks of Zweig-DiMenna Associates, making up nearly 2.5% of the entire portfolio.

In May, Ovintiv Inc. (NYSE:OVV) lifted its dividend by 25%, and the company has sold some assets in Uinta and Bakken for approximately $250 million.

Miller Value Partners mentioned Ovintiv Inc. (NYSE:OVV) in its Q4 2021 investor letter. Here is what is said:

“The outlook for high multiple favorites depends to a great degree on interest rates. Warren Buffett likened interest rates to the force of gravity for asset prices. At current low levels, high valuations on long-duration assets can be justified. If interest rates move up, the adjustment will be painful. Market action early in the new year, with the swift moves up in interest rates and down in the Nasdaq, offers a taste of the medicine.

We underwrite all our names to have sufficient upside even if risk-free rates move up to 3% (a scenario, not a forecast!). As we evaluate the opportunity set, we find more attractive prospects in the classic value names. We often hear that people think value investing is dead, which only strengthens our conviction. Our gross exposure to classic value has risen from 44% a year ago to 62% currently."
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MY TAKE: OVV closed at $52.77 on September 2. My current valuation is $93.00 (5X annualized operating cash flow per share), which compares to First Call's price target of $68.17. The Company is one of the "Elite Eight" in our Sweet 16 Growth Portfolio. The balance sheet is in good shape and should be in GREAT SHAPE by year-end. It is on a pace to generate $2.8 billion of free cash flow from operations this year, allowing it to keep reducing debt, pay a decent dividend ($0.25/share after Q2) that I expect to be increased, and fund a very aggressive stock repurchase program that should lower outstanding shares by 10%.
> On 8/31/22 Barclays rated it a BUY with a price target of $75.00
> On 8/29/22 Truist Financial rated it a BUY with a price target of $77.00


With production now over 500,000 Boepd and expected to increase to 540,000 Boepd in 2023, OVV should be a core holding in any growth + income hedge fund that is not restricted from buying fossil fuel companies.

For more information, read our recently updated profile on OVV that you can find under the Sweet 16 tab on our website.
Dan Steffens
Energy Prospectus Group
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