Ovintiv (OVV) remains one of the best re-rating opportunities among exploration and production companies, supported by improving Permian well productivity, shareholder returns and a stronger balance sheet, UBS Securities said.
The brokerage said in a Tuesday note that the company's balance sheet leverage is no longer an issue, with net debt dropping to $3.3 billion, compared with the $4 billion target.
The company's buyback program is still ramping, even at 50% to 75% of its free cash flow target, and it has already hit the $1 million-per-well cost savings targeted in the Montney from the NuVista acquisition, according to the note.
UBS also highlighted improving Permian well productivity while maintaining well costs, helped by broader surfactant use across wells. The investment firm cut Ovintiv's 2026 EPS estimate to $4.40 from $8.53, largely reflecting a $1.5 billion impairment charge, while raising 2027 and 2028 estimates to $11.40 and $12.52, respectively.
The firm has a buy rating on the stock with a $75 price target.
Shares of Ovintiv were down 1.3% in Wednesday trading.
Price: $57.35, Change: $-0.74, Percent Change: -1.27%