Devon Energy Stock Has 24% Upside, According to 1 Wall Street Analyst

Devon Energy Stock Has 24% Upside, According to 1 Wall Street Analyst

Devon Energy (NYSE: DVN) continues to find favor among the analyst community. Although analysts at Truist recently lowered their target price on the stock to $66 from $69, the target still implies a near 24% upside potential over the next 12 months or so.

A different take

Truist’s position is interesting and slightly different from what other analysts have been saying. Citi recently upgraded its price target to $55 based on an improvement in Devon’s natural gas assets, and Wells Fargo raised its rating to overweight and its price target to $59 in anticipation of improvements in well efficiency due to Devon drilling in its core Delaware basin assets.

Truist’s view is that the financial industry is still too negative on the oil exploration and production sector, suggesting that they (asset managers) are underweight in the sector. In simple terms, this means Truist feels asset managers, who often sector weight their holdings in line with S&P 500 sector weightings, are holding less than the S&P 500 weightings in exploration and production oil stocks.

This is sometimes seen as a bullish indicator because it implies there’s potential for asset managers to allocate more money to the sector and balance their holdings to the S&P 500 sector weightings. Truist believes investors should be “overweight” the sector, so there’s even more potential upside.

Image source: Getty Images.

Is Devon Energy a stock to buy?

Devon Energy is part of the universe of stocks that Truist likes to play this theme on, and it’s hard to disagree. The price of oil is $86 a barrel; OPEC and OPEC+ countries (including energy giants Saudi Arabia and Russia) continue to curtail production, and whoever wins the election, the new U.S. administration will have to replenish the massive drawdown in the strategic petroleum reserve undertaken by the current regime.

Meanwhile, Devon’s mix of quality assets, compelling shareholder return policy, and investment strategy make it an ideal stock to buy for oil price bulls.

Should you invest $1,000 in Devon Energy right now?

Before you buy stock in Devon Energy, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Devon Energy wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005… if you invested $1,000 at the time of our recommendation, you’d have $539,230!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of April 8, 2024

Citigroup is an advertising partner of The Ascent, a Motley Fool company. Wells Fargo is an advertising partner of The Ascent, a Motley Fool company. Lee Samaha has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Truist Financial. The Motley Fool has a disclosure policy.

Devon Energy Stock Has 24% Upside, According to 1 Wall Street Analyst was originally published by The Motley Fool