Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Wednesday, CFRA analyst Alex Goh downgraded OMV AG (ETR:OMVV) (OMV:AV) (OTC: OMVKY) stock rating from Hold to Sell, adjusting the price target downward to EUR30.00 from the previous EUR40.00. The revision reflects a conservative valuation approach based on a price-to-earnings (P/E) ratio of 5.3x, which is one standard deviation below the ten-year average of 8.7x. The stock currently trades at a P/E of 9.49x, and according to InvestingPro analysis, appears undervalued based on its Fair Value metrics. The stock has recently taken a significant hit, declining over 11% in the past week.
Goh's assessment came after OMV reported a decrease in hydrocarbon production for the first quarter of 2025. The production numbers showed an 8% quarter-over-quarter and a 12% year-over-year decline, resulting in 310 thousand barrels of oil equivalent per day (kboe/d). This drop was attributed to the divestment of a 50% stake in SapuraOMV in December 2024 and irregular production volumes from Norway and Libya in the latter part of 2024. Despite these challenges, InvestingPro data shows the company maintains strong financial health with a current ratio of 1.71 and operates with moderate debt levels. The company also boasts an impressive 31-year track record of consistent dividend payments, currently yielding 8.12%.
The analyst pointed out that the production figures were largely anticipated, aligning with the company's guidance of 300 kboe/d for 2025, which indicated an expected 12% annual decline from the 340 kboe/d recorded in 2024. OMV's sales volume for the first quarter also saw a 12% year-over-year reduction, coming in at 282 kboe/d.
In response to these developments, CFRA adjusted its earnings per share (EPS) forecasts for OMV, projecting a decrease of 8% to EUR5.62 for 2025 and a 13% reduction to EUR5.40 for 2026. These revisions are based on lower anticipated Brent crude oil prices and refining margins.
The downgrade also factors in potential risks from the current U.S. tariff tensions, which could lead to slower global economic growth and further pressure on crude oil and chemical prices. OMV is scheduled to announce its first-quarter 2025 financial results on April 30, 2025.
In other recent news, OMV AG has announced a major business merger with the UAE's Abu Dhabi National Oil Company (ADNOC). This strategic move involves combining OMV's chemical unit, Borealis, with Borouge to create Borouge Group International. The new entity is set to become the fourth-largest polyolefins company globally and is expected to finalize the transaction in the first quarter of 2026. OMV will hold a 47% stake in the newly formed company. Following this announcement, Berenberg analysts upgraded OMV's stock rating from Hold to Buy and increased the price target from €43.00 to €56.00. Berenberg's analysis indicates that OMV's stake in Borouge Group International is initially valued between €15 billion and €20 billion. The analysts also noted that the minimum dividend from Borouge Group International is expected to cover over 90% of OMV's regular dividend. They highlighted the potential for OMV to distribute a special dividend to shareholders, especially if chemical margins improve.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.