Opinions
Greg Newman
Ovintiv
OVV-T
WEAK BUY
May 30, 2025
Stock price when the opinion was issued
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Premium contentPremium contentOVV holds highly productive assets in the Montney, Anadarko and Permian basins. They have worked hard to optimize assets following the acquisition of Newfield in 2019. We like that it has maintained cash reserves while reducing debt and it trades under 2x book value. The dividend is backed by a payout ratio under 10% of cash flow. We recommend placing a stop-loss at $49, looking to achieve $81 -- upside potential of 29%. Yield 2.1%
(Analysts’ price target is $81.05)Premium contentAs a predictive question it is of course difficult. OVV is quite cheap and producing nice free cash flow. Positive momentum has returned to the sector. It has room for further dividend hikes. We would be comfortable holding for a while.
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They refocused operations on the Montney and are pushing strong into the US (Utah, the Permian Basis). It's been rangebound like all energy stocks since 2022, but the free cash-flow yield is a high 15%. They have quality assets, but are in no-man's land (changing the company name and pushing in the US) and not a focus for Canadian energy investor and lacks the scale of US peers. That said, is a good operator run by a good CEO. Not his preferred energy name.
Natural gas (59%) play in the US. Went off the radar of Canadian investors. Good deal here. Q1 free cashflow beat by 16%, lower operating expenses, modestly higher liquids. Buybacks. At 3.8x, cheaper than peers at 5.5x. Decent production, flat cashflow per share. Balance sheet a bit more indebted than peers.