Citi expects this underperforming oil and gas stock to turnaround next year with 16% upside

Investors should take a second look at the oil and gas exploration company Ovintiv , according to Citibank. Ovintiv's stock collapsed earlier this year and is down near 12%, underperforming the S & P Oil & Gas Exploration & Production ETF which is up 2% for year. But the $12 billion company is primed for a turnaround in 2024, according Citi. The investment bank has upgraded Ovintiv to buy and raised its stock price target by $4 to $52, a more than 16% upside from the company's last closing price at $44.67. Citi believes Ovintiv's performance in early 2024 will improve with the investment bank putting oil and condensate production 2% above consensus estimates. Ovintiv's production plateau will rise after assessing performance on wells acquired in the Midland acreage earlier this year, according to Citi. “Later in FY2024, we see continued outperformance on the anticipation that gas markets tighten in FY2025,” analyst Scott Gruber wrote. Meanwhile, Citi downgraded APA Corp, an oil and gas company with a similar market cap to Ovintiv. The investment bank is now neutral on APA and slashed its price target by $15 to $37. APA is down nearly 22% for the year and Citi sees less room for growth with higher capital expenditures amid a plateauing Egypt business and U.S. growth offset by U.K. declines.