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Devon Energy: Analysts’ Recommendations and Mean Target Price

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Analysts’ recommendations

Based on data compiled by Reuters, among the 33 analysts tracking Devon Energy (DVN), 55% recommended a “buy,” while 45% recommended a “hold.” None of the analysts recommended a “sell.” On May 30, Guggenheim reduced its target price on Devon Energy by $6 to $37. On May 16, UBS increased its target price on the stock by $1 to $37. On May 29, Devon Energy stock closed at $26.85.

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Fewer “buy” recommendations

In the last few months, the “buy” recommendations for Devon Energy have declined. The weak outlook for natural gas prices and oil prices might have increased the “hold” recommendations for the stock.

In the second quarter, based on analysts’ consensus estimates, Devon Energy’s EPS could rise 27.7% sequentially. Currently, Devon Energy is at a one-year forward PE ratio of 11.5x compared to the S&P 500 Index’s (SPY) average of 24.1x the holdings in the upstream subsector.

On May 29, Devon Energy announced that “it has entered into a definitive agreement to sell its Canadian business to Canadian Natural Resources Limited for CAD $3.8 billion, or USD $2.8 billion.” On February 19, Devon Energy reported its earnings for the fourth quarter of 2018 and upstream asset restructuring plan. The company’s asset restructuring plan would be a big boost for the stock. Devon Energy planned to separate its Canadian and Barnett Shale upstream assets by the end of this year.

Mean target price

In the next year, Devon Energy’s mean target price is ~$39.5, which implies a potential upside of ~47.2% from its last closing level. Noble Energy (NBL) and Occidental Petroleum (OXY) have mean target prices that suggest potential upsides of 52.6% and 36.6%, respectively.

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