Wolfe Research downgraded Civitas Resources (CIVI) to Peer Perform from Outperform after the company and SM Energy (SM) announced an all-stock merger agreement. The firm no longer sees Civitas trading on standalone fundamentals given its plans to merge with SM Energy where its valuation will be influenced by a deal conversion price. The firm added that the deal suggests a lack of interest for Civitas’ DJ assets, and believes that there may be questions as to why management did not wait to see if it could execute on more consistent operational performance after CEO Doyle left in early August.
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