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Devon Energy Jumps on Raymond James Upgrade to Strong Buy

The strong performance of Devon's Delaware wells offer opportunities for productivity gains, Raymond James said.
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Devon Energy  (DVN) - Get Report shares jumped Tuesday after Raymond James analyst John Freeman upgraded the oil and gas producer to strong buy from outperform and raised his price target to $40 from $34.

The strong performance of Devon's Delaware wells offer opportunities for productivity gains, he said, according to The Fly. That would boost Devon's free-cash-flow-to-enterprise-value ratio, which could mean a higher dividend yield, Freeman said.

Devon shares recently traded at $30, up 13.0%. They have doubled over the past six months amid rising oil prices and optimism for an economic recovery.

Oil prices hit 2 1/2-year highs Tuesday after the OPEC+ alliance predicted rising prices, as demand is rising while supply is falling. And nuclear talks with Iran haven’t produced an accord yet. OPEC plans to raise production next month.

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U.S. crude recently traded at $67.75 a barrel, up 2.16%.

In other oil industry news, Cabot Oil & Gas  (COG) - Get Report and Cimarex Energy  (XEC) - Get Report agreed last week to merge in an all-stock deal valued at more than $17 billion.

Under terms of the deal, Cimarex shareholders will receive 4.0146 shares of Cabot for each share of Cimarex common stock they own. Once finalized, Cabot shareholders will own approximately 49.5% and Cimarex shareholders will own approximately 50.5%.

The deal combines Cabot's roughly 173,000 net acres in the Marcellus Shale and Cimarex's approximately 560,000 net acres in the Permian and Anadarko basins.

Also last week, TheStreet.com identified Cimarex and Chevron  (CVX) - Get Report as possible buys, with TheStreet.com founder Jim Cramer saying that he likes Chevron.

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