On Monday, Truist Securities revised its price target for Civitas Resources (NYSE:CIVI), a company specializing in energy production. The firm has lowered the target to $100 from the previous $105 but continues to recommend the stock with a Buy rating.
The adjustment in the price target was attributed to changes in the firm's model, which now includes a revised price deck and updated forecasts for the years 2024 through 2026. The new target is based on two main valuation methods that Truist Securities employs equally.
The first method involves applying a 4.0x EV/EBITDAX multiple, slightly above the peer average of 3.9x, to the firm's estimated EBITDAX for the year 2025, which stands at $3,982 million. This figure is slightly below the consensus estimate of $4,008 million. The second method used by Truist Securities for determining the price target is based on a Free Cash Flow to Enterprise Value (FCF/EV) Yield assumption of 13.0%.
The analyst from Truist Securities has expressed confidence in Civitas Resources by maintaining a Buy rating, despite the reduction in the price target. This suggests that the firm still sees value in the company's shares and anticipates positive performance in the future.
In other recent news, Civitas Resources has demonstrated a strong financial performance and received positive acknowledgments from several analyst firms. The company successfully integrated three Permian acquisitions, leading Mizuho Securities to maintain an Outperform rating and a $98.00 price target. The firm also highlighted Civitas' 5% reduction in budgeted drilling, completion, and equipment costs, and early achievement of its $300 million asset sale target.
RBC Capital Markets initiated coverage on Civitas with an Outperform rating and a $90.00 price target, due to the company's operational efficiency and reduced regulatory concerns. CapitalOne also reaffirmed its positive stance on Civitas, maintaining an Overweight rating and a steady price target of $97.00 per share. The firm highlighted Civitas' secondary offering of approximately 6.96 million shares, sold by the Canada Pension Plan Investment Board, which did not result in dilution for existing shareholders.
Civitas also reported robust Q1 2024 performance, returning $215 million to shareholders through a share repurchase agreement. The company's recent developments have been positively received by analysts from RBC Capital Markets, Truist Securities, and CapitalOne. Truist Securities adjusted its price target for Civitas from $103 to $105, maintaining a Buy rating due to significant progress in the Permian Basin.
InvestingPro Insights
In light of Truist Securities' revised price target for Civitas Resources (NYSE:CIVI), it's worth examining some key metrics and tips from InvestingPro to gain additional perspective. Civitas Resources boasts a market capitalization of approximately $7.12 billion and maintains a Price to Earnings (P/E) ratio of 8.77, which is even more attractive when looking at the adjusted P/E ratio for the last twelve months as of Q1 2024, sitting at 8.61. This indicates a potentially undervalued stock, especially considering the company's significant dividend yield of 8.73% as of the latest data. Furthermore, the company's revenue growth over the last twelve months is a robust 14.4%, signaling strong financial health.
InvestingPro Tips highlight that Civitas Resources has raised its dividend for three consecutive years and pays a significant dividend to shareholders, which aligns with the high dividend yield noted in the data. Additionally, the company's stock typically exhibits low price volatility, offering a degree of stability for investors. With 9 analysts revising their earnings downwards for the upcoming period, it's important for potential investors to monitor upcoming earnings reports and analyst forecasts. Moreover, there are 7 additional tips available on InvestingPro for Civitas Resources, which can provide further insights into the company's financial performance and stock valuation.
For those looking to delve deeper into Civitas Resources' financials and stock potential, InvestingPro offers a comprehensive analysis. Use coupon code PRONEWS24 to get up to 10% off a yearly Pro and a yearly or biyearly Pro+ subscription, and unlock the full suite of InvestingPro Tips for Civitas Resources at https://www.investing.com/pro/CIVI.
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