Civitas Resources, Inc. : There is still some upside potential

06/22/2022 | 08:37am EDT

Eduardo Yusseppe Quiñonez Diaz

long trade Stop-loss triggered

Entry price : 58.9$ | Target : 83$ | Stop-loss : 55$ | Potential : 40.92%

Shares in Civitas Resources, Inc. show a positive technical chart pattern over the medium term. The timing to jump back on the rising trend seems good. Investors have an opportunity to buy the stock and target the $ 83.

Summary

• The company has strong fundamentals. More than 70% of companies have a lower mix of growth, profitability, debt and visibility.
• The company presents an interesting fundamental situation from a short-term investment perspective.
• According to Refinitiv, the company's ESG score for its industry is poor.

Strengths

• Analysts expect a sharply increasing business volume for the group, with high growth rates in the coming years.
• Before interest, taxes, depreciation and amortization, the company's margins are particularly high.
• The group's activity appears highly profitable thanks to its outperforming net margins.
• Thanks to a sound financial situation, the firm has significant leeway for investment.
• The company has a low valuation given the cash flows generated by its activity.
• Over the last twelve months, the sales forecast has been frequently revised upwards.
• Upward revisions of sales forecast reflect a renewed optimism among the analysts covering the stock.
• For the past year, analysts covering the stock have been revising their EPS expectations upwards in a significant manner.
• For the last 4 months, the company has been enjoying highly positive EPS revisions, which were frequently and significantly raised.
• Analysts covering this company mostly recommend stock overweighting or purchase.
• The average target price set by analysts covering the stock is above current prices and offers a tremendous appreciation potential.
• The average price target of analysts who are interested in the stock has been strongly revised upwards over the last four months.
• Historically, the company has been releasing figures that are above expectations.

Weaknesses

• Prospects from analysts covering the stock are not consistent. Such dispersed sales estimates confirm the poor visibility into the group's activity.
• The price targets of analysts who cover the stock differ significantly. This implies difficulties in evaluating the company and its business.

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