According to Jefferies, Devon Energy should continue to recover even if the oil rally falters as bullish catalysts for the stock emerge – including the completion of its merger with Coterra. The investment firm upgraded the oil and gas producer to “buy from hold.” Additionally, the stock’s price target was raised to $62 from $53, a 37% increase from Thursday’s close. Devon is “too cheap to ignore catalysts,” analyst Lloyd Byrne said in a note to clients on Thursday. “Dips at the top of the oil curve create opportunities, and DVN has multiple catalysts for absolute and relative outperformance after…”[merger] In fact, according to FactSet, Devon trades at a forward price-to-earnings ratio of 8.28. That’s well below the S&P 500’s multiple of more than 21. Oil prices have recently fallen due to a weak ceasefire between the US and Iran. U.S. West Texas Intermediate futures last traded at $94.94, down nearly 7% this week. Futures contracts expiring later in the year also suggest lower prices. However, the stock – which is up 24% year to date – will see a boost after its merger with Coterra Energy is completed, which Jefferies says will likely result in a 24% rise in Devon shares, which the company says could likely “eliminate debt and boost returns,” according to LSEG data. According to LSEG data, 24 of the 28 analysts covering Devon agree with Jefferies’ assessment.
