Devon Energy Stock Targeted at $60, Worth Buying at $52?

Devon Energy Stock

Two Wall Street analysts have expressed bullish sentiments regarding Devon Energy (NYSE:DVN), predicting that its stock could reach $60. Piper Sandler recently raised its price target from $59 to $60, echoing Wells Fargo’s outlook, and maintained an overweight rating on the stock. This upward adjustment suggests a potential 14% upside to the stock price over the next 12 months.

Investors in Devon Energy are anticipating substantial returns, including dividends and buybacks, along with the possibility of share price appreciation. Considering these factors, there is a potential for a total return of around 20% from the stock, contingent upon reaching the $60 price target.

To achieve this optimistic scenario, confidence in the sustainability of current oil prices around $83 per barrel is crucial. Despite the inherent difficulty in predicting energy prices, investors are encouraged by the relatively high prices observed in 2024, especially amid a period of sluggish global economic growth. Additionally, attention is focused on coordinated production cuts by OPEC and OPEC+ countries, as well as the necessity to replenish the U.S. strategic petroleum reserves following significant drawdowns.

Devon Energy’s growth prospects are not solely tied to oil prices. The company aims to enhance well productivity by focusing on drilling activities in its premium assets within the Delaware Basin. With 60% of its capital expenditure allocated to the Delaware Basin, management anticipates a 10% improvement in well productivity compared to 2023.

Investors eagerly await Devon Energy’s upcoming earnings report on May 1, seeking updates on drilling operations and the company’s cash return strategy, which includes prioritized share buybacks and dividend payouts. Given the current oil price environment, a positive update is anticipated. Consequently, Devon Energy appears to be an appealing investment option for both oil enthusiasts and income-seeking investors.

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