Ovintiv (OVV) Valuation Update - May 8

[dan_s]

I have updated my forecast/valuation model for Ovintiv.
> Their Q1 results beat my forecast and they have raised their full year production guidance.
> ~64% of their production is natural gas and NGLs, and most of their ngas hedges are collars with high ceilings.

My valuation increases by $1 to $70/share. < My valuation multiple is just 4.5 X annualized operating CFPS, which is conservative for a company of this sized and high-quality.

Ovintiv pays a small dividend of $0.30/quarter for yield of just 2.35% based on today's share price. The majority of their free cash flow is going 50/50 to pay down debt and buyback shares, both of which should push stock valuations higher. Their balance sheet should be in great shape by year-end, so I do expect them to raise dividends next year.

Ovintiv used to be named EnCana. I have followed it for more than 20 years, so I have a HIGH level of confidence in my model for this large-cap.

OVV is trading at $50.88 at the time of this post.

Three highly respected analysts (all 3 are rated 5-Stars by TipRanks) have submitted updated price targets to TipRanks this morning:
> Jason Bouvier at Scotiabank rates OVV a BUY with a price target of $58
> Gabriele Sorbara at Siebert Williams Shank & Co rates OVV a BUY with a price target of $71
> Lloyd Byrne at Jefferies rates OVV a BUY with a price target of $69