Ovintiv Inc. (OVV) Update - July 2
Posted: Fri Jul 02, 2021 10:49 am
OVV is currently trading for $32.25.
Ovintiv (formerly EnCana) is one of the largest companies in the Sweet 16. I have been following it for over a decade.
I now believe it is one of the safest picks in the Sweet 16.
I have updated my forecast/valuation model and I have increased my CURRENT valuation by $11 to $56. Why?
> Most of their "Bad Hedges" expire at year-end 2021 and they have very little production hedged for 2022.
> Despite the impact of their hedges, Ovintiv is on track to generate $1.6 Billion of FCF from operations.
> Their balance sheet was a problem six months ago, but it will be in good shape at year-end. Thanks in part to some non-core asset sales in Q2 2021.
> I raised my CFPS multiple used to value the stock from 4.0 to 4.5 X, which is still conservative for a company of this quality.
> A reasonable 12-month price target (6X 2022 operating CFPS of $13.30) is $80.
Low risk with a lot of upside when the Wall Street Gang figures this one out.
Ovintiv (formerly EnCana) is one of the largest companies in the Sweet 16. I have been following it for over a decade.
I now believe it is one of the safest picks in the Sweet 16.
I have updated my forecast/valuation model and I have increased my CURRENT valuation by $11 to $56. Why?
> Most of their "Bad Hedges" expire at year-end 2021 and they have very little production hedged for 2022.
> Despite the impact of their hedges, Ovintiv is on track to generate $1.6 Billion of FCF from operations.
> Their balance sheet was a problem six months ago, but it will be in good shape at year-end. Thanks in part to some non-core asset sales in Q2 2021.
> I raised my CFPS multiple used to value the stock from 4.0 to 4.5 X, which is still conservative for a company of this quality.
> A reasonable 12-month price target (6X 2022 operating CFPS of $13.30) is $80.
Low risk with a lot of upside when the Wall Street Gang figures this one out.