Ovintiv Inc. (OVV) Valuation Update - Nov 9

[dan_s]

OVV was trading at $45.55 when this was posted.

I have updated my forecast/valuation model for OVV and it will be posted to the EPG website this afternoon.

My current valuation increases by $0.50 to 67.00/share. I actually lowered by valuation multiple from 4.5 to 4.25 X annualized operating cash flow, just to be bit more conservative until we see a bit more stability in the oil price.

Ovintiv's Q3 results, especially their operating cash flow and free cash flow came in much better than I expected.
> For the year, Ovintiv is on track to generate over $1 billion of free cash flow.
> FCF will be primarily focused on lowering debt and stock buybacks, which improves my per share outlook for 2024.
> For 2024 my forecast is now $10.49 Net Income per share and $18.21 operating CFPS, compared to TipRanks' forecast of $8.14 & $16.37.
> I expect 2024 production to be in the range of 580,000 to 590,000 Boepd and D&C capex to be under $2.5 billion, which is lower than D&C capex this year. Ovintiv tends to "under-promise and then over-deliver" on their guidance, which the Wall Street Gang prefers.

TipRanks' current price target is $56.97. Four of the analysts covering OVV have updated their price targets in the last two days to $53, $58, $65, and $66. They all rate the stock a BUY.