RBC Capital Markets Downgrades Civitas Resources (CIVI) Stock, Reduces PT

RBC Capital analyst Scott Hanold downgraded Civitas Resources, Inc. (NYSE:CIVI)’s stock to “Sector Perform” from “Outperform,” reducing its price objective to $40 from the prior target of $47, as reported by The Fly.

RBC Capital Markets Downgrades Civitas Resources (CIVI) Stock, Reduces PT

A close up of a tanker truck transporting crude oil, natural gas liquids, and natural gas.

This change in stance by the analyst is because of certain factors impacting the company’s outlook. The analyst highlighted the current volatility in the broader oil market and Civitas Resources, Inc. (NYSE:CIVI)’s elevated financial leverage as reasons that can restrict the potential for gains.

While Civitas Resources, Inc. (NYSE:CIVI)’s management exhibited confidence in meeting its debt targets by 2025 end, the firm opines that its leverage is expected to remain higher as compared to its peers. The company continues to prioritize net debt reduction via FCF generation and asset divestments. Civitas Resources, Inc. (NYSE:CIVI) targets $4.5 billion net debt by year-end 2025 (a reduction of ~$800 million from pro-forma year-end 2024).

The company expects Q2 2025 capital expenditures to be marginally higher than Q1 2025, implying a slight shift of DJ Basin capital from the first to the second quarter. For Q2 2025, it expects oil volumes in the range of 146 MBbl/d – 151 MBbl/d. Civitas Resources, Inc. (NYSE:CIVI) expects ~5% oil volume growth at the midpoint of its guidance range, mainly from new wells coming online in the Permian Basin.

Civitas Resources, Inc. (NYSE:CIVI) is an exploration and production company which is focused on the acquisition, development, and production of crude oil and associated liquids-rich natural gas.

While we acknowledge the potential of CIVI to grow, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and have limited downside risk.  If you are looking for an AI stock that is more promising than CIVI and that has 100x upside potential, check out our report about this cheapest AI stock.

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Disclosure: None.