Why Devon Energy (DVN) Stock Is Up On Monday Morning

NEW YORK (TheStreet) --Shares of Devon Energy Corp. (DVN) are up 1.00% to $80 in pre-market trading today following a ratings upgrade to "buy" from "neutral" at Citigroup (C).

The firm said it raised its rating on the independent energy company as it believes the market is undervaluing Devon's midstream assets and future drop-down potential.

Citigroup increased its price target on the stock to $96 from $75.

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Separately, TheStreet Ratings team rates DEVON ENERGY CORP as a Buy with a ratings score of B. TheStreet Ratings Team has this to say about their recommendation:

"We rate DEVON ENERGY CORP (DVN) a BUY. This is driven by multiple strengths, which we believe should have a greater impact than any weaknesses, and should give investors a better performance opportunity than most stocks we cover. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance, impressive record of earnings per share growth, compelling growth in net income and expanding profit margins. We feel these strengths outweigh the fact that the company has had generally high debt management risk by most measures that we evaluated."

Highlights from the analysis by TheStreet Ratings Team goes as follows:

  • DVN's very impressive revenue growth greatly exceeded the industry average of 3.2%. Since the same quarter one year prior, revenues leaped by 88.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
  • Powered by its strong earnings growth of 123.65% and other important driving factors, this stock has surged by 48.12% over the past year, outperforming the rise in the S&P 500 Index during the same period. Regarding the stock's future course, although almost any stock can fall in a broad market decline, DVN should continue to move higher despite the fact that it has already enjoyed a very nice gain in the past year.
  • DEVON ENERGY CORP reported significant earnings per share improvement in the most recent quarter compared to the same quarter a year ago. The company has demonstrated a pattern of positive earnings per share growth over the past year. We feel that this trend should continue. During the past fiscal year, DEVON ENERGY CORP continued to lose money by earning -$0.10 versus -$0.48 in the prior year. This year, the market expects an improvement in earnings ($5.77 versus -$0.10).
  • The net income growth from the same quarter one year ago has significantly exceeded that of the S&P 500 and the Oil, Gas & Consumable Fuels industry. The net income increased by 124.2% when compared to the same quarter one year prior, rising from -$1,339.00 million to $324.00 million.
  • 45.23% is the gross profit margin for DEVON ENERGY CORP which we consider to be strong. It has increased significantly from the same period last year. Along with this, the net profit margin of 8.69% is above that of the industry average.
  • You can view the full analysis from the report here: DVN Ratings Report
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