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On Friday, KeyBanc Capital Markets reaffirmed their positive stance on Civitas Resources (NYSE:CIVI), maintaining an Overweight rating and a price target of $84.00.
The endorsement comes despite the company's shares having fallen by 33% in 2024, underperforming the broader energy sector represented by the SPDR S&P Oil & Gas Exploration & Production ETF (NYSE:XOP), which saw a decline of just 3% during the same period.
The firm's analyst cited various factors that weighed on Civitas Resources' performance last year, including concerns about the company's oil production outlook for 2025, challenges integrating assets in the Permian Basin, regulatory scrutiny in Colorado, and the need to reduce debt. However, the analyst expressed confidence that these issues are either exaggerated or will be resolved, which should not affect the company's prospects in the long term.
KeyBanc's analysis specifically addressed investor worries, suggesting that the concerns regarding oil production and Permian integration are overstated. Moreover, the issues related to Colorado's regulatory environment and the company's debt levels are deemed manageable and unlikely to persist. The firm elaborated on these points in detail on pages 3 and 4 of their report.
The research firm's outlook for Civitas Resources in 2025 is constructive, underpinning their bullish position on the stock. KeyBanc's reiteration of the Overweight rating and the $84 price target arrives as the market anticipates the company's fourth-quarter earnings report, which is scheduled for release next month.
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