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Investing.com - UBS raised its price target on Devon Energy (NYSE:DVN) to $37.00 from $35.00 on Friday, while maintaining a Neutral rating on the stock. The energy company, currently trading at a P/E ratio of 7.71 with a market capitalization of $21.79 billion, is showing signs of undervaluation according to InvestingPro analysis.
The price target increase reflects Devon Energy’s year-to-date outperformance against the XOP by more than 400 basis points, which UBS attributes to the company’s cost optimization plan. InvestingPro data reveals the company has maintained dividend payments for 33 consecutive years, currently offering a 2.83% yield, while maintaining a GOOD overall Financial Health Score.
Devon’s optimization strategy is expected to generate higher free cash flow and margin expansion into 2026, with $400 million of the planned $1 billion in capital expenditure and operating expense reductions anticipated in 2025.
UBS expects Devon Energy to report positive operational results for the second quarter of 2025, with oil volumes likely reaching the high end of the company’s guidance range.
While maintaining its Neutral stance ahead of second-quarter results, UBS views Devon’s potential for higher free cash flow generation positively, noting it could accelerate debt reduction and increase capital returns to shareholders.
In other recent news, Devon Energy has been the subject of multiple analyst reviews and strategic updates. Citi analysts have maintained their Buy rating with a price target of $43, citing the company’s $1 billion optimization plan and its potential impact on cost structure and free cash flow by 2027. Raymond (NSE:RYMD) James also reaffirmed their Outperform rating, highlighting Devon Energy’s improved guidance for 2025 and the sale of its Matterhorn Pipeline equity for approximately $375 million. JPMorgan analysts kept a Neutral rating with a $40 price target, noting the company’s detailed strategy to achieve $1 billion in pre-tax free cash flow by the end of 2026.
Benchmark reiterated its Buy rating with a $44 price target, though it slightly adjusted its second-quarter EBITDA estimate to $1.752 billion. Devon Energy reported the results of its 2025 Annual Meeting of Stockholders, where all ten Board nominees were elected, and KPMG LLP was ratified as the independent auditor for the fiscal year. An advisory vote on executive compensation was approved, but a stockholder proposal to change special meeting holding requirements was not. These developments are part of Devon Energy’s ongoing efforts to optimize operations and improve financial performance.
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