Devon Energy Struggles Amid Market Gains: A Closer Look at Recent Performance
Headquartered in Oklahoma City, Devon Energy Corporation (DVN) is an independent energy company that actively explores, develops, and produces oil and natural gas, mainly in the U.S. With a market cap of $24.6 billion, it plays a significant role in the energy sector.
Stock Performance Lags Behind Major Indices
Over the past year, Devon Energy’s stock has struggled significantly, declining 14.3%, while the broader S&P 500 Index ($SPX) has achieved a rally of nearly 35.8%. In just 2024, DVN lost 11.7%, contrasting sharply with the SPX’s 24.3% year-to-date rise.
Comparative Analysis with Market Peers
When analyzing DVN’s performance against the iShares U.S. Oil & Gas Exploration & Production ETF (IEO), the underachievement appears less severe. The ETF has experienced marginal gains year-to-date, while DVN continues to post double-digit losses.
Mixed Earnings Report and Revised Production Forecast
Devon Energy’s struggles can be attributed to various factors such as declining oil prices, rising competition, and operational hurdles. On Nov. 5, the company released its mixed Q3 earnings, resulting in a slight stock gain of 1.7% the following trading day. Total revenue increased by 4.9% year over year to $4.02 billion, yet Q3 profit fell by 10.8% to $812 million.
Looking ahead, Devon Energy has raised its Q4 production forecast to a range of 811,000 to 830,000 Boe per day, bolstered by its recent acquisition in the Williston Basin, with an estimated capital expenditure midpoint of $950 million directed towards growth initiatives.
Analysts’ Expectations and Stock Ratings
For the fiscal year ending December 2024, analysts predict a 13.7% EPS decline to $4.93 on a diluted basis. However, the company has a history of exceeding earnings estimates, having surpassed the consensus forecast in each of the last four quarters.
Among the 25 analysts monitoring DVN, the consensus rating remains a “Moderate Buy.” This rating includes 14 “Strong Buy” recommendations, two “Moderate Buys,” and nine “Holds,” indicating a slightly less optimistic outlook compared to three months ago when there were 15 “Strong Buy” ratings.
On Nov. 6, Stephen Richardson from Evercore ISI reaffirmed a ‘Hold’ rating on Devon Energy, setting a price target of $50, suggesting a potential upside of 24.9% from current levels. Conversely, Paul Cheng from Scotiabank maintained a ‘Buy’ rating with a target of $60.
The average price target stands at $52.42, signaling a 31% premium to DVN’s current price. Notably, the highest target of $68 indicates a remarkable upside potential of 69.9%.
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On the date of publication, Rashmi Kumari did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information, please view the Barchart Disclosure Policy here.
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