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On Monday, RBC Capital Markets analyst Keith Mackey upgraded shares of NOV Inc. (NYSE: NOV) from Sector Perform to Outperform, setting a price target of $22.00. Currently trading at $14.64, significantly below its 52-week high of $21.20, the stock appears undervalued according to InvestingPro analysis. The upgrade reflects a positive outlook on the company’s financial performance, with expectations of above-average EBITDA growth for the year 2025.
Mackey noted that NOV’s EBITDA growth, currently at $1.33 billion, free cash flow (FCF) conversion, and FCF returns to shareholders are anticipated to continue improving. With robust free cash flow of $953 million and a healthy FCF yield of 17%, the analyst’s optimism is also based on an increase in the expected stock buyback program, which is now assumed to be about 5-6% of the outstanding shares.
The decision to upgrade NOV’s stock rating was influenced by the relative performance of the company’s shares. Mackey stated that the new price target of $22 aligns with the target returns of other stocks that RBC Capital Markets has rated as Outperform.
NOV Inc., a leading provider of technology and equipment to the global energy industry, is expected to benefit from the industry’s recovery and growth. The company’s strong financial metrics and shareholder return strategies have positioned it favorably among its peers.
Investors and market watchers will be keeping a close eye on NOV’s stock performance following this upgrade, as it could signal increased confidence in the company’s growth prospects and financial health. InvestingPro data shows the company maintains a "GREAT" financial health score, with analyst price targets ranging from $13 to $25. Discover more insights and 6 additional ProTips about NOV with an InvestingPro subscription, including the comprehensive Pro Research Report available for this stock.
In other recent news, NOV Inc. reported fourth-quarter results that exceeded expectations, with adjusted earnings of $0.41 per share, surpassing analyst estimates of $0.36 per share. The company also reported revenue of $2.31 billion, above the anticipated $2.26 billion, despite a 1% year-over-year decrease. NOV’s operating profit increased by 29% year-over-year to $207 million, while adjusted EBITDA rose 3% to $302 million. For the full year 2024, NOV reported a 3% increase in revenue to $8.87 billion and net income of $635 million, or $1.60 per diluted share. Looking forward to the first quarter of 2025, NOV anticipates a slight decline in consolidated revenues by 1-3% year-over-year, with adjusted EBITDA projected between $235 million and $265 million.
In leadership developments, NOV announced the appointment of Jose Bayardo as President and Chief Operating Officer and Rodney Reed as Senior Vice President and Chief Financial Officer. This transition is part of NOV’s ongoing succession planning strategy. Meanwhile, Raymond (NSE:RYMD) James raised its price target for NOV to $19, maintaining an Outperform rating. The firm cited NOV’s strong free cash flow performance and robust order activity as contributing factors. Raymond James highlighted NOV’s intention to enhance shareholder returns, reflecting confidence in the company’s strategic initiatives aimed at financial growth.
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