Civitas Resources (CIVI) PT Lowered to $84 at Mizuho

Mizuho analyst Nitin Kumar lowered the price target on Civitas Resources (NYSE: CIVI) to $84.00 (from $98.00) while maintaining a Outperform rating.

The analyst commented: "CIVI is demonstrating strong operational execution as it integrates the transformational Permian acquisitions made in 2H23, which have reshaped its asset base (now roughly balanced between the Permian and DJ Basin) and extended its inventory duration. Continued capex and operating cost efficiency improvements should provide a tailwind to capex/FCF expectations as CIVI fully integrates the assets. Moreover, the recent legislative compromise in Colorado significantly reduces regulatory/political risk in the state for the next ~3.5 years, which in our view should substantially reduce a key overhang for the stock. A recently-enhanced cash return framework now gives CIVI flexibility to lean more heavily into buybacks, which should resonate with investors and sets up positively into the meaningful FCF expansion in 2H24. Shares continue to trade at a wide discount to peers on both FCF/EV and EV/EBITDX, which we believe undervalues the meaningful portfolio transformation underway."

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