Analyst David Deckelbaum of TD Cowen maintained a Buy rating on Ovintiv, with a price target of $56.00.
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David Deckelbaum has given his Buy rating due to a combination of factors, primarily focusing on Ovintiv’s strategic acquisition of NuVista Energy. This acquisition is expected to significantly enhance Ovintiv’s production capabilities by adding approximately 100 Mboe/d across 140,000 net acres, which complements their existing assets in the oil-rich Alberta Montney region. The acquisition is strategically balanced by a planned divestiture of Ovintiv’s Anadarko assets, which is anticipated to offset the financial impact of the NuVista deal and aid in accelerating debt reduction.
Additionally, the transaction is projected to generate around 10% free cash flow per share accretion, driven by $100 million in annual synergies. These synergies are expected to result from both capital savings through streamlined operations and cost savings from enhanced scale. Despite the relatively high valuation of NuVista, the acquisition redefines Ovintiv’s scale in the Montney region and supports a balanced financial impact, contingent upon the successful sale of the Anadarko assets. Furthermore, Ovintiv’s updated guidance reflects a 2% increase in production with stable capital expenditure, indicating improved operational efficiency.
In another report released on October 27, Evercore ISI also maintained a Buy rating on the stock with a $43.00 price target.