Mizuho lowers Civitas Resources stock price target to $50 on execution focus

Investing.com - Mizuho (NYSE:MFG) has reduced its price target on Civitas Resources (NYSE:CIVI) to $50.00 from $52.00 while maintaining an Outperform rating on the stock. Currently trading at $31.22, with a P/E ratio of 3.26x and offering a substantial 9.49% dividend yield, InvestingPro analysis suggests the stock is undervalued relative to its fundamentals.

The firm expects Civitas to maintain its 2025 activity plans and outlook, citing the relative improvement in oil prices since May. Mizuho notes that with oil volumes increasing in the second half of 2025 while capital expenditures decrease, Civitas is positioned to deliver significant free cash flow expansion in the latter part of the year. According to InvestingPro data, the company already demonstrates a strong free cash flow yield of 30%, with 8 additional key insights available to subscribers.

Mizuho acknowledges that after a disappointing 2025 outlook in February and underwhelming first-quarter results and second-quarter guidance in May, investors are seeking improved execution to restore confidence in the company’s ability to deliver on its second-half 2025 program and beyond. With an EBITDA of $3.62 billion and analyst targets ranging from $30 to $58, detailed valuation metrics and comprehensive analysis are available in the Pro Research Report on InvestingPro.

The firm is looking for updates on Civitas’s cost reduction efforts, noting that the company appears positive about initial progress. Mizuho also seeks information on the timing and outlook for Civitas’s targeted approximately $300 million in asset sales.

Additionally, Mizuho is interested in early results from Civitas’s first fully-designed Delaware Basin wells in Lea County near the state line, which began production in the second quarter of 2025.

In other recent news, Civitas Resources has announced the pricing of a $750 million senior notes offering, which was upsized from its initial amount. The proceeds from this offering are intended to repay part of the outstanding borrowings under the company’s revolving credit facility. Additionally, Civitas Resources plans to offer $500 million in senior unsecured notes due in 2032, aiming to further address its existing debt. These financial maneuvers are part of the company’s strategy to maintain a strong balance sheet and return capital to shareholders.

UBS has raised its price target for Civitas Resources to $30 from $27, maintaining a Neutral rating. The firm expects improved performance following operational challenges earlier in the year, particularly in the Delaware Basin. On the other hand, RBC Capital Markets has downgraded Civitas Resources from Outperform to Sector Perform, citing market volatility and the company’s higher financial leverage as potential constraints. RBC Capital also reduced its price target to $40 from $47.

In a strategic move, Civitas Resources has amended its credit agreement, reducing the borrowing base from $3.4 billion to $3.3 billion while keeping its elected loan limit at $2.5 billion. This amendment also removes the springing maturity requirement for its revolving credit facility. These developments reflect Civitas Resources’ ongoing efforts to manage its financial position amidst market uncertainties.

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