Ovintiv Inc. (OVV) Valuation Update - Aug 6
Posted: Sat Aug 06, 2022 1:44 pm
OVV closed at $47.82 on August 5.
TipRanks: "In the last 3 months, 12 ranked analysts set 12-month price targets for OVV. The average price target among the analysts is $68.00. The 12 price targets range from $51 to $100."
I have increased my current valuation by $3 to $92.00 per share.
Ovintiv (formerly named EnCana) is a large-cap upstream company that deserves to be trading at much more than 2.7 X operating cash flow per share.
MY Operating CFPS forecasts
2021A = $12.29
2022E = $17.90 < TipRank's consensus is $18.23
2023E = $25.51 < TipRank's consensus is $23.86
Why?
> In 1H 2022 the Company generated $2,242 million of operating cash flow and they should come close to $4.6 billion of operating cash flow this year.
> Assuming they spend the high end of the their capex budget range ($1.8 billion) this Company should generate $2.8 billion of free cash flow this year.
> From Q2 Ovintiv's production should ramp up by 20,000 Boepd to a 2022 exit rate of 520,000 Boepd.
> If WTI averages $100/bbl and HH ngas averages $5/MMBtu, Ovintiv should generate over $6.3 billion of operating cash flow and over $4 billion of FCF in 2023.
> Look for higher dividends and aggressive stock buybacks to draw more attention.
TipRanks: "In the last 3 months, 12 ranked analysts set 12-month price targets for OVV. The average price target among the analysts is $68.00. The 12 price targets range from $51 to $100."
I have increased my current valuation by $3 to $92.00 per share.
Ovintiv (formerly named EnCana) is a large-cap upstream company that deserves to be trading at much more than 2.7 X operating cash flow per share.
MY Operating CFPS forecasts
2021A = $12.29
2022E = $17.90 < TipRank's consensus is $18.23
2023E = $25.51 < TipRank's consensus is $23.86
Why?
> In 1H 2022 the Company generated $2,242 million of operating cash flow and they should come close to $4.6 billion of operating cash flow this year.
> Assuming they spend the high end of the their capex budget range ($1.8 billion) this Company should generate $2.8 billion of free cash flow this year.
> From Q2 Ovintiv's production should ramp up by 20,000 Boepd to a 2022 exit rate of 520,000 Boepd.
> If WTI averages $100/bbl and HH ngas averages $5/MMBtu, Ovintiv should generate over $6.3 billion of operating cash flow and over $4 billion of FCF in 2023.
> Look for higher dividends and aggressive stock buybacks to draw more attention.