Ovintiv Inc. (OVV) Update - Jan 7

[dan_s]

Ovintiv is one of the "Elite Eight" in our Sweet 16 and it is also one of my Top Picks for 2022.
OVV was trading at $38.33 at the time of this post.

I have updated my valuation to $66.00 and there is upside to my valuation if their guidance confirms my 2022 production forecast, which is just 3% growth year-over-year. My valuation is just 4.5X 2021-2023 annualized operating cash flow, which is low multiple for a company of this size. Their year-end reserve report should justify a higher valuation multiple.

The only thing I don't like is that they have an aggressive stock repurchase plan and I'd rather see them use all free cash flow to pay down their debt. They don't have a near-term debt problem, but I'd like to see a lower leverage ratio.

TipRanks: "In the last 3 months, 13 ranked analysts set 12-month price targets for OVV. The average price target among the analysts is $47.39. The price targets range from $37 to $59."
On 1/3/2022 Mizuho analyst Vincent Lovaglio lowered the firm's price target on Ovintiv to $54 from $56 and keeps a Buy rating on the shares. The analyst reduced some price targets in the exploration and production space to reflect lower natural gas price expectations in 2022 and 2023. However, he believes energy is "poised for another year of outperformance" relative to the broader market, led by E&P.