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Investing.com - Raymond James raised its price target on Devon Energy (NYSE:DVN) to $46.00 from $45.00 while maintaining an Outperform rating. According to InvestingPro data, Devon Energy currently trades at $35.58 with a P/E ratio of 7.97x, suggesting potential upside. The company has maintained dividend payments for 33 consecutive years, currently offering a 2.7% yield.
The firm updated its estimates based on current commodity prices after Devon Energy beat Raymond James and Street forecasts on production and capital expenditure by approximately 2% and 7%, respectively. Devon Energy also reduced its 2025 capital expenditure by about $100 million for the second consecutive quarter.
Raymond James noted that Devon Energy attributed $75 million of the $100 million capital expenditure reduction to its ongoing optimization plan. The company also expects additional free cash flow improvements of approximately $1 billion over the next three years from lower cash tax and about $50 million annually after acquiring remaining non-controlling interests in Cotton Draw Midstream.
For third-quarter 2025, Raymond James projects production of approximately 837 thousand barrels of oil equivalent per day (including 387 thousand barrels of oil per day) and capital expenditure of about $908 million, which aligns with guidance and Street expectations. The firm’s 2025 production estimate of approximately 833 thousand barrels of oil equivalent per day and $3.7 billion in capital expenditure are also in line with consensus.
Raymond James projects a 2025/2026 free cash flow yield of approximately 9%/10% for Devon Energy, in line with peers, and a 2026 estimated EV/EBITDA of about 4.2x compared to peers at approximately 4.5x. The price target increase reflects improved capital efficiency at the company. With a market capitalization of $22.59 billion, InvestingPro’s Fair Value analysis suggests Devon Energy is currently undervalued.
In other recent news, Devon Energy reported its financial results for the second quarter of 2025, which showed a mixed performance. The company posted earnings per share of $0.84, which was below the forecasted $0.88, marking a 4.55% negative surprise. Despite this, Devon Energy’s revenue exceeded expectations by 5.94%, reaching $4.28 billion. In analyst updates, Wells Fargo raised its price target for Devon Energy from $42 to $43, while maintaining an Overweight rating on the stock. The firm adjusted its models based on updated production volumes, operating expenses, and commodity price realizations. These developments reflect recent changes and expectations surrounding Devon Energy.
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