Devon Energy benefits from a best in class hedge position, allowing a more orderly management of the downcycle and the ability to maintain operating momentum through the trough, Deutsche Bank noted. The price target hike stems from the increased EURs for Eagle Ford and Bone Spring shale wells.
For its fourth quarter of 2014, the independent energy company posted lower than expected earnings of $83 cents per share, versus $1.10 per share from the year-ago quarter.
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However, Devon Energy did report higher than expected total revenue of $5.99 billion versus $2.62 billion from the fourth quarter of 2013.
Devon Energy posted 2014 fiscal year earnings of $4.92 per share. Analysts lowered their earnings estimates to $1.78 per share from $3.31 per share for fiscal year 2015.
Soros Fund Management, the hedge fund firm which manages the investments of investor George Soros and his family, took stakes in Devon Energy this past Tuesday, Reuters reported.
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 several positive factors, 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, reasonable valuation levels, largely solid financial position with reasonable debt levels by most measures, increase in stock price during the past year and expanding profit margins. We feel these strengths outweigh the fact that the company has had sub par growth in net income."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- DVN's very impressive revenue growth greatly exceeded the industry average of 20.9%. Since the same quarter one year prior, revenues leaped by 128.5%. This growth in revenue does not appear to have trickled down to the company's bottom line, displayed by a decline in earnings per share.
- The current debt-to-equity ratio, 0.52, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that DVN's debt-to-equity ratio is low, the quick ratio, which is currently 0.67, displays a potential problem in covering short-term cash needs.
- Compared to where it was 12 months ago, the stock is up, but it has so far lagged the appreciation in the S&P 500. Turning our attention to the future direction of the stock, it goes without saying that even the best stocks can fall in an overall down market. However, in any other environment, this stock still has good upside potential despite the fact that it has already risen in the past year.
- 43.92% is the gross profit margin for DEVON ENERGY CORP which we consider to be strong. Despite the high profit margin, it has decreased significantly from the same period last year. Despite the mixed results of the gross profit margin, DVN's net profit margin of -6.80% significantly underperformed when compared to the industry average.
- You can view the full analysis from the report here: DVN Ratings Report