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On Wednesday, Mizuho (NYSE:MFG) Securities adjusted its financial outlook for Devon Energy (NYSE:DVN), increasing the stock’s price target from $47.00 to $49.00, while reaffirming an Outperform rating. The revision follows Devon’s recent announcement of its 2025 capital plan, which anticipates approximately 5% lower spending and about 2% higher production volumes than previously projected. According to InvestingPro data, 11 analysts have recently revised their earnings estimates upward, with analyst targets ranging from $42 to $67 per share. The stock currently trades at $34.88, and InvestingPro analysis suggests the company is undervalued based on its Fair Value model.
Devon Energy exceeded expectations in the fourth quarter of 2024, with EBITDA and free cash flow (FCF) surpassing consensus estimates by roughly 9% and 3%, respectively. The latest financial data from InvestingPro shows the company generated $7.34 billion in EBITDA over the last twelve months, maintaining a healthy gross profit margin of 50%. The company’s management emphasized that the integration of Grayson Mills is yielding synergies beyond the initial $50 million target. Analysts are keen to receive further details during the company’s conference call.
The oil and gas producer also concluded its operating partnership with BPX in the Eagle Ford (NYSE:F) region. Devon’s management is optimistic about achieving drilling and completion (D&C) savings, which are expected to enhance the asset’s economic performance.
Devon Energy’s financial health appears robust, with a net debt to EBITDA ratio around 1.0x. InvestingPro analysis confirms this strength with a "GOOD" overall Financial Health Score of 2.8, particularly noting the company’s 32-year track record of consistent dividend payments. The company has expressed intentions to allocate up to 70% of its free cash flow to shareholder returns. This includes a base dividend, which was recently increased by approximately 9% following the fourth-quarter results of 2024, and planned share buybacks ranging from $200 to $300 million. The stock currently offers a dividend yield of 3.53%, supported by strong fundamentals including a P/E ratio of 6.48x.
These strategic moves align with Devon’s ongoing efforts to reach its long-term debt target of $2.5 billion. The raised net asset value (NAV)-based price target to $49 reflects Mizuho’s confidence in Devon’s ability to execute its financial strategy while delivering value to its shareholders. For deeper insights into Devon Energy’s valuation and financial metrics, investors can access the comprehensive Pro Research Report, available exclusively on InvestingPro.
In other recent news, Devon Energy Corp. reported a notable fourth-quarter earnings beat, driven by record oil production and strong performance across its assets. The oil and gas producer posted adjusted earnings of $1.16 per share, outpacing the analyst consensus estimate of $0.98. Revenue was reported at $4.4 billion, exceeding the $4.17 billion projected by analysts.
Devon’s oil production reached a high of 398,000 barrels per day in Q4, surpassing guidance by 3%. The company generated $1.7 billion in operating cash flow and $738 million in free cash flow during the quarter, returning $444 million to shareholders through dividends and share repurchases.
In terms of future outlook, Devon expects 2025 production to be between 805,000 to 825,000 barrels of oil equivalent per day. The board has approved a 9% increase to the quarterly fixed dividend for 2025, reflecting confidence in the energy outlook and future cash flows. These developments provide an overview of Devon’s recent financial performance and future projections.
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