Wolfe Research Sees Limited Upside for Civitas Resources, Inc. (CIVI) Following SM Energy Merger Announcement

Civitas Resources, Inc. (NYSE:CIVI) is one of the 12 deep value stocks to invest in.

Wolfe Research Sees Limited Upside for Civitas Resources, Inc. (CIVI) Following SM Energy Merger Announcement

On November 4, 2025, Wolfe Research downgraded Civitas Resources (NYSE:CIVI) from “Outperform” to “Peer Perform.” The investment firm’s revised rating reflects limited short-term upside, given that the company’s valuation is now tied to its all-stock merger with SM Energy. The firm believes the company’s standalone investment appeal is not much anymore following the merger announcement.

On the previous day, Civitas Resources, Inc. (NYSE:CIVI) announced its $12.8 billion merger with SM Energy, which will result in the creation of one of the top 10 U.S. independent oil producers. SM Energy is an energy company focused on crude oil, natural gas, and NGLs operations.

The deal will see each of the company’s shares converted into 1.45 SM Energy shares, representing roughly 823,000 net acres combined across the top U.S. shale basins. Through the merger, the companies expect up to $300 million in annual synergies, alongside stronger free cash flow generation of over $1.4 billion in 2025 and sustained dividends.

Civitas Resources, Inc. (NYSE:CIVI), an independent oil and gas company, focuses on the acquisition, development, and production of crude oil and liquids-rich natural gas from assets in the Permian and DJ Basins.

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.

READ NEXT: 13 Best Fortune 500 Stocks to Invest in Now and 13 Best Fortune 500 Stocks to Invest in Now.

Disclosure: None.