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Investing.com - Mizuho (NYSE:MFG) has reiterated an Outperform rating and $58.00 price target on Ovintiv Inc. (NYSE:OVV), projecting the company will exceed market expectations in its upcoming financial results. With analyst targets ranging from $41 to $65 and the stock currently trading at $38.05, InvestingPro analysis suggests the stock is currently undervalued, presenting a potential opportunity for investors.
The investment firm forecasts Ovintiv will deliver approximately 1% higher EBITDAX and 11% higher free cash flow than current Street estimates, primarily driven by improved oil price realizations. The company’s strong financial position is reflected in its EBITDA of $4.5 billion and free cash flow yield of 14% over the last twelve months. Mizuho expects the company’s second-quarter earnings call, scheduled for July 23, to address the launch of LNG Canada Phase 1 and its potential impact on Montney gas fundamentals.
Ovintiv has reported steady execution of its 2025 capital plan, with momentum from approximately 53 Midland basin TILs (turned-in-line wells) in the first quarter pushing oil and condensate volumes toward the higher end of the 202-208 thousand barrels per day range. The company anticipates modest production declines from these levels in the second half of 2025.
Mizuho notes that only about 23% of Ovintiv’s gas production from the Montney basin in the second half of 2025 will be exposed to the AECO benchmark pricing. This limited exposure positions the company to potentially benefit from changing gas market dynamics following the LNG Canada startup.
The company remains committed to its capital return program, allocating at least 50% of post-base dividend free cash flow to shareholders, which Mizuho calculates implied approximately $146 million in share buybacks for the second quarter of 2025. InvestingPro data shows the company has maintained dividend payments for 53 consecutive years, with a current yield of 3.15%. Get deeper insights into Ovintiv’s financials and access exclusive analysis with an InvestingPro subscription, including 6 additional ProTips and a comprehensive Pro Research Report.
In other recent news, Ovintiv Inc. has experienced several notable developments. Goldman Sachs upgraded Ovintiv’s stock rating from Neutral to Buy, raising the price target to $51.00, citing an attractive risk/reward profile and improved inventory position. The investment bank highlighted Ovintiv’s strategic moves, such as divesting higher-cost Uinta assets and acquiring more efficient Montney inventory. Additionally, Fitch Ratings revised Ovintiv’s outlook to positive from stable, affirming its ’BBB-’ rating, due to progress in debt reduction and recent acquisitions enhancing its business profile. Ovintiv’s strategic acquisitions have expanded its production capabilities, notably in the Montney and Permian regions, and improved its overall business profile. Senators, including Elizabeth Warren, have raised concerns about Ovintiv’s lobbying activities related to a tax bill, questioning potential benefits for the company. The senators requested information on Ovintiv’s lobbying spending and political donations. These developments reflect Ovintiv’s ongoing strategic adjustments and financial positioning in the energy sector.
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