Fannie Mae, Freddie Mac shares tumble after conservatorship comments
On Monday, Mizuho (NYSE:MFG) Securities adjusted its price target for Devon Energy (NYSE:DVN) shares, reducing it from $49.00 to $46.00, while continuing to recommend the stock as an Outperform. The revision reflects the firm's updated model for year-end 2024 reserves and expectations for the company's performance in the first quarter of 2025. With the stock currently trading at $28.61 and a P/E ratio of 6.2x, InvestingPro analysis indicates the shares are trading near their 52-week low of $29.06, suggesting a potentially attractive entry point.
The analysis by Mizuho anticipates a quarter that aligns with projections, with attention centering on Devon Energy's ability to navigate short-term market instability and implement cost reductions to enhance cash margins. Despite recent challenges, the company maintains strong fundamentals with $15.17 billion in revenue over the last twelve months and an impressive gross profit margin of 52.83%. Devon Energy has indicated a slight decline in production volumes for the first quarter of 2025, approximately 3% lower quarter over quarter from a peak in the last quarter of 2024. This trend is expected to persist into the second quarter of 2025.
Investors are keen to understand whether Devon Energy will maintain its capital plan for 2025 or if there will be any reductions in activities. Mizuho predicts that the company's capital plan will remain firm, barring any substantial downturns in commodity prices or broader economic conditions.
Under the leadership of CEO Clay Gaspar, Devon Energy is set to introduce strategies aimed at decreasing costs, which is anticipated to improve profit margins. Mizuho's decision to lower the net asset value-based price target by approximately 6% to $46 still comes with an Outperform rating, signaling confidence in the stock's potential performance relative to its industry peers. According to InvestingPro, the stock appears undervalued based on its Fair Value analysis, with 8 analysts recently revising their earnings estimates upward. For deeper insights into Devon Energy's valuation and growth potential, including exclusive ProTips and comprehensive financial analysis, subscribers can access the full Pro Research Report on the platform.
In other recent news, Devon Energy Corporation has been the subject of various analyst reports and company announcements. Citi analyst Scott Gruber has adjusted the price target for Devon Energy to $43, while maintaining a Buy rating. Gruber's analysis includes a slight increase in the company's first-quarter cash flow per share estimate to $2.72, aligning with consensus expectations. Meanwhile, BMO Capital Markets continues to hold an Outperform rating on Devon Energy, with a $52 price target, following a meeting with the company's new CEO, Clay Gaspar. BMO emphasizes Devon's strong financial position and operational efficiency, citing its free cash flow yield and enterprise value to EBITDA ratio as attractive metrics.
Benchmark analysts have also maintained a Buy rating with a $44 price target, projecting higher-than-consensus earnings per share and EBITDA for Devon Energy's first quarter. These projections suggest better product realizations than the market expects. Additionally, Devon Energy has announced the upcoming retirement of board member John Krenicki Jr., effective at the end of his current term, as disclosed in a recent SEC filing. Krenicki's departure is not due to any disagreements, and he will not seek re-election at the 2025 annual meeting. During his tenure, Krenicki contributed significantly to strategic decisions, including the merger with WPX Energy (NYSE:WPX).
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.