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Civitas Resources (NYSE:CIVI) is initiated with an Overweight rating and $92 price target at Piper Sandler, which says the stock is undervalued as it trades at a half-turn discount on estimated 2024 EV/EBITDA to its small-to-midcap oil peers.
The company has delivered one of the strongest oil-driven returns in the E&P sector, and its strong executional and operational performance in the D-J Basin, which should ultimately translate well as it expands into the Permian Basin, Piper’s Mark Lear said.
Civitas (CIVI) entered the Permian last June through two transactions for $4.7B in cash and stock which added 100K boe/day and ~800 undeveloped locations, followed by a $2.1B acquisition in October for another 62K boe/day and 400 locations.
Civitas (CIVI) management has demonstrated its commitment to a strong shareholder return business model, which prioritizes FCF generation, returning capital to shareholders, and targeting less than 1x leverage through a combination of capital discipline, consolidation and hedging,” Lear wrote.