Dividend.com: Devon Downgraded

An analyst says there are concerns about a hedging strategy that could restrict the company's growth.
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Devon Energy Catches an Analyst Downgrade

Devon Energy

(DVN) - Get Report

shares are down slightly after the company was downgraded at Barclays from overweight to equal weight.

The analyst has an $82 target on the company. There is concern that the natural gas company may have a hedging strategy that can cap its near-term growth.

We removed shares of Devon from our "Recommended" list back on July 31, when shares were trading at $94.89. The company has a dividend yield of 0.9%, based on last night's closing stock price of $70.98. The stock has technical support in the $55 to $59 price area.

If this fails to hold, then the $41 to $42 levels could come into play. If the shares can consolidate at these current levels and begin to move up, the overhead resistance could come in around the $83 mark. We would be very selective in the energy space right here, and instead look at a name like

BP

(BP) - Get Report

with an attractive dividend yield.

Devon Energy is not recommended at this time, holding a Dividend.com Rating of 3.2 out of 5 stars.

Mosaic Cutting Output to Offset Weak Sales

Mosaic

(MOS) - Get Report

announced that profit the quarter ended Nov. 30 rose to $959.8 million, or $2.15 per share, from $394 million, or 89 cents per share, in the year-ago quarter.

The company reported its crop-nutrient sales fell sharply at the end of the fiscal quarter and were expected to remain weak through February. In anticipation of further weakness, management is reducing its production to manage excess inventories and will be reducing capital expenditures as well.

We had removed shares of Mosaic from our "Recommended" list back on Aug. 4, when the stock traded at $109.29. The company has a 0.53% dividend yield, based on last night's closing stock price of $37.67. The company has recent technical support in the $22 to $26 price area. If the shares can firm up, overhead resistance would come in at the $44 to $45 levels. We would be cautious with this name until we get a sense of which way the momentum will bounce.

Mosaic is not recommended at this time, holding a Dividend.com Rating of 2.6 out of 5 stars.

Cigna Cutting 4% of Payroll as Employers Cut Benefits

Cigna

(CI) - Get Report

announced it cut roughly 1,100 jobs, as it contends with customers who are reducing the number of people covered by insurance.

The company said it expects about a 2% decline this year in membership, which stood at 11.9 million people at the end of last year's third quarter. Other health care providers such as

Aetna (AET)

and

UnitedHealth Group

(UNH) - Get Report

have been slashing staff as well in recent months.

We have avoided shares of Cigna since our early June coverage began, when the shares were trading at $41.55. The company has a 0.22% dividend yield, based on last night's closing stock price of $18.15. The stock has long-term technical support in the $12 area, and again at $8. If the shares can stabilize and begin to move up, overhead resistance would show up in the $22 area. We would look elsewhere for better investment opportunities at this time.

Cigna is not recommended at this time, holding a Dividend.com Rating of 3.1 out of 5 stars.

BankAmerica/Merrill Team Loses Brokerage Boss

Bank of America

(BAC) - Get Report

is announcing that Bob McCann, who has led Merrill Lynch's 16,000 brokerage division since 2003, is stepping down.

This news follows November's announcement that the top executive of Merrill Lynch & Co.'s Asian investment banking unit was leaving the U.S.-based brokerage.

It seems that the deal did have its opponents who felt the cultures were too different for the synergies to be effective. We have said that buying an investment bank like Merrill Lynch is far from a layup for any acquirer. If the acquirer cannot retain and keep superstar brokers, then there is a likelihood that assets can walk out the door as well. It will be interesting to watch the combination materialize over time. We had removed shares of Bank of America from our "Recommended" list back on Sept. 15, when the stock traded at $33.74. We would still avoid the name at this current time.

Bank of America is not recommended at this time, holding a Dividend.com Rating of 3.0 out of 5 stars.

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At the time of publication, the author had no positions in stocks mentioned, although positions may change at any time.

Tom Reese and Paul Rubillo are senior editors of Dividend.com. Visit Dividend.com for more dividend stock ratings, picks, news, and analysis for long-term and income-seeking investors.