Devon Energy (NYSE: DVN) Gets Strong Buy Rating and Higher Price Target from Piper Sandler

By Don Francis, Editor
May 15, 2024 7:07 AM UTC
Devon Energy (NYSE: DVN) Gets Strong Buy Rating and Higher Price Target from Piper Sandler

Piper Sandler's Mark Lear raised their price target on Devon Energy (NYSE: DVN) by 1.7% from $60 to $61 on May 14, 2024. The analyst maintained their Strong Buy rating on the stock.

In a post-Q1 reporting season wrap-up, Lear noted that strong results from the Energy (Oil & Gas E&P) group were "somewhat offset by weaker crude pricing as Mideast ceasefire talks reversed the bulk of the geopolitical risk premium Piper Sandler had assumed heading into the prints."

Devon Energy reported better-than-expected earnings per share (EPS) of $1.16 for Q1 2024, beating the Zacks Consensus Estimate of $1.10. However, this figure was 20.6% lower than Q1 2023's $1.46. The company's revenue for the quarter came in at $3.6 billion, missing the Zacks Consensus Estimate by 0.56% and also falling short of Q1 2023's $3.82 billion by 5.8%.

Despite the mixed financial results, Devon Energy reported a production of 664,000 oil-equivalent barrels (Boe) per day and a 3% decrease in capital expenditures (Capex) to $842 million compared to the previous quarter.

Looking ahead, management provided guidance for Q2 2024, expecting a production range of 670,000 to 690,000 Boe per day and a Capex of $950 million. For the full year 2024, Devon Energy aims to achieve a production range of 655,000 to 675,000 Boe per day and a Capex of $3.3 billion to $3.6 billion.

Devon Energy's President & CEO, Rick Muncrief, expressed satisfaction with the company's Q1 performance, stating, "By all measures, Devon delivered an outstanding set of results in Q1 that demonstrated the comprehensive execution we achieved across every element of our disciplined strategy." Muncrief highlighted the positive impact of well productivity, efficiency gains, and lower per-unit costs on operating margins. As a result, Devon Energy raised their Q2 and FY 2024 guidance, which includes increased production targets and enhanced free cash flow projections.

In addition to the rating change for Devon Energy, Piper Sandler's Mark Lear made several adjustments to their price targets for other companies in their portfolio. Apa Corp saw their price target lowered by -5.7% from $35 to $33, while Northern Oil & Gas Inc had their price target raised by 2.4% from $42 to $43. Chord Energy Corp also saw a slight increase in their price target by 0.4% from $230 to $231, and Coterra Energy Inc had their price target raised by 5.4% from $37 to $39. Lastly, Eog Resources Inc had their price target raised by 0.7% from $153 to $154.

As for the overall sentiment towards Devon Energy, 83.3% of top-rated analysts rate the stock as a Strong Buy or Buy, while 16.7% see it as a Hold. No analysts recommend or strongly recommend selling the stock.

The consensus forecast among analysts is that Devon Energy will deliver earnings per share (EPS) of $7.09 for the upcoming year. If this projection holds true, it would represent a 34.5% increase year-over-year.

Since the release of Devon Energy's latest quarterly report on May 1, 2024, the stock price has declined by 1.1%. However, on a year-over-year basis, the stock is up 4.4%. It's worth noting that during this period, Devon Energy has trailed behind the S&P 500, which has seen a significant increase of 26.8%.

Mark Lear, the Piper Sandler analyst who raised the price target on Devon Energy, is ranked in the top 2% of Wall Street analysts by WallStreetZen. With an average return of 12.4% and a win rate of 67.3%, Lear specializes in the Consumer Cyclical and Energy sectors.

Devon Energy Corporation, founded in 1971 and headquartered in Oklahoma City, OK, is a hydrocarbon exploration company with operations in various regions, including the Barnett Shale STACK formation in Oklahoma, the Delaware Basin, the Eagle Ford Group, and the Rocky Mountains. The company also has oil sands operations in Alberta, Canada.

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