Analyst Raises Price Target on Civitas Resources after Strong Q1 2024 Earnings

Truist Securities's Neal Dingmann raised their price target on Civitas Resources (NYSE: CIVI) by 1.9% from $103 to $105 on 2024/05/06. The analyst maintained their Strong Buy rating on the stock.

Dingmann's optimistic outlook on Civitas Resources comes on the heels of the company's Q1 2024 earnings report, which delivered an earnings beat. Dingmann noted that the company has successfully integrated its Permian assets, resulting in increased well productivity and operational efficiencies.

Looking forward, Dingmann predicts that Civitas Resources will generate a strong free cash flow of 25% next year. This will provide the company with the means to support continued shareholder return, debt repayment, and further accretive deals.

Providing a breakdown of Civitas Resources' recent financial performance, the company reported an EPS of $3.20 for Q4 2023, surpassing the Zacks Consensus Estimate of $2.92. However, this figure represented a slight decline of 2.7% compared to Q4 2022's $3.29. Revenue for the same period came in at $1.127 billion, beating Q4 2022's $814.27 million by an impressive 38.4%. However, it fell short of the Zacks Consensus Estimate by 6.35%.

For the fiscal year 2023, Civitas Resources reported an EPS of $9.02, a significant decrease of 61.6% compared to FY 2022's $14.58. Revenue for FY 2023 amounted to $3.4 billion, reflecting a 10.5% decline from FY 2022's $3.8 billion.

Providing guidance for FY 2024, CEO Chris Doyle highlighted the company's strategic expansion in the Permian Basin and the continued strong performance of its DJ Basin asset. Doyle emphasized the company's focus on maximizing free cash flow, returning cash to shareholders, and maintaining a strong balance sheet.

In addition to the positive outlook for Civitas Resources, Dingmann also made adjustments to other stocks in their portfolio. They lowered the price target on Marathon Oil Corp by -2.8% and maintained a Strong Buy rating. The price target on Riley Exploration Permian Inc was also lowered by -5.9%, while the Strong Buy rating was maintained.

Analysts' sentiment towards Civitas Resources remains overwhelmingly positive, with 100% of top-rated analysts rating the stock as a Strong Buy or Buy. No analysts recommend holding or selling the stock.

Since the release of Civitas Resources' Q1 2024 earnings report on May 2, the stock price has increased by 6.8%. Year-over-year, the stock has gained 10.4%. However, during this period, Civitas Resources has underperformed the broader market, with the S&P 500 recording a 25.2% increase.

Neal Dingmann, the Truist Securities analyst who provided the updated rating and price target, has an impressive track record. Ranked in the top 1% of Wall Street analysts by WallStreetZen, Dingmann specializes in the Real Estate and Energy sectors, among others, and boasts an average return of 14.9% and a win rate of 65.8%.

Civitas Resources, Inc. is an oil and natural gas exploration and production company focused on the Rocky Mountain region, particularly the Wattenberg Field of the Denver-Julesburg Basin in Colorado. Established in 1999 and headquartered in Denver, CO, the company has steadily grown its portfolio and aims to create sustainable long-term value for its shareholders.

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