Devon Energy (DVN) Update - Dec 16

[dan_s]

I spent several hours today updating my forecast/valuation model for Devon Energy.

At the time of this post DVN was trading at $32.68. My updated valuation is $53.00.
TipRanks: "In the last 3 months, 18 ranked analysts set 12-month price targets for DVN. The average price target among the analysts is $49.71." The 18 price targets range from $43 to $64, so the entire Wall Street Gang thinks this stock is grossly oversold.

Based on my Q4 2024 forecast, which is very close to the TipRanks' consensus for Q4, Devon should generate over $700 million of free cash flow in Q4.

This morning Morgan Stanley and Mizuho Securities adjusted their price targets to $47 for DVN. < 43.8% higher than the current share price.

Devon closed the Grayson Mill Acquisition on September 27th, so Q4 will be the first full quarter of combined results.

Q4 production mix should be close to 48.5% crude oil, 26.0% natural gas and 25.5% NGLs. Increasing natural gas and NGL prices should more than offset Devon's realized oil price being ~$5/bbl lower in Q4 than it was in Q3.

Devon is a large-cap with over 800,000 Boepd of current production.

[dan_s]

My updated forecast models for DVN and EOG are now available on the EPG website.