Civitas Resources price target raised to $30 from $27 at UBS on operational outlook
Investing.com
Published Jul 01, 2025 07:45AM ET
Investing.com - UBS raised its price target on Civitas Resources (NYSE:CIVI) to $30.00 from $27.00 while maintaining a Neutral rating ahead of the company's second-quarter 2025 earnings release. The stock, currently trading at $27.52, offers a substantial 11% dividend yield and trades at a modest P/E ratio of 3.3x. According to InvestingPro analysis, Civitas appears undervalued based on its Fair Value metrics.
The investment firm expects improved performance from Civitas Resources following operational challenges at the beginning of 2025. UBS specifically looks for demonstrated improvement in the Delaware Basin as the company begins work on its own operated wells in the play. Despite recent challenges, the company maintains a "GOOD" Financial Health Score, supported by strong free cash flow generation.
UBS noted that Civitas Resources' recent debt offering provides added financial flexibility for the medium term. However, the firm indicated that net debt reduction will need to be demonstrated for the stock to experience a re-rating.
Key catalysts for Civitas Resources, including inventory expansion and increasing capital returns, await the completion of debt reduction efforts, according to UBS's analysis.
The price target adjustment represents an approximately 11% increase from the previous target of $27.00, while the Neutral rating on Civitas Resources stock remains unchanged.
In other recent news, Civitas Resources reported stronger-than-expected earnings for the first quarter of 2025, with earnings per share of $1.77, surpassing the analyst forecast of $1.63. The company also exceeded revenue expectations, reporting $1.19 billion compared to the anticipated $1.18 billion. In a strategic financial move, Civitas Resources announced the pricing of a $750 million senior notes offering, which will be used to repay part of its revolving credit facility. The company also revealed plans for a $500 million notes offering aimed at reducing existing debt. On the analyst front, RBC Capital downgraded Civitas Resources from Outperform to Sector Perform, citing market volatility and the company's higher financial leverage. Additionally, Civitas Resources amended its credit agreement, reducing its borrowing base from $3.4 billion to $3.3 billion while maintaining its elected loan limit at $2.5 billion. These developments reflect Civitas Resources' ongoing efforts to manage its financial position amidst a challenging market environment.
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