Devon Energy Corp (DVN) — Shares of this independent oil and gas exploration company rallied 2.8% after it beat earnings estimates. Devon reported adjusted earnings of 76 cents per share versus Zacks consensus estimate of 57 cents.
Production rose 1.3% year over year to 680,000 barrels of oil-equivalent per day, which exceeded the high end of the company’s guidance. Zacks noted this is the fifth consecutive quarterly increase in oil output, which it attributed to Devon’s focus on its high-quality North American properties.
Management increased its outlook for 2015, saying it now expects production growth of 31% to 33%.
Even though energy prices have been languishing near their lows, Devon cut Q3 operating expenses by 10.4% year over year. This sets the company up to benefit when oil prices turn back up.
Credit Suisse rates DVN stock “outperform” with a $62 price target. Its analysts said the company’s improved performance coupled with the “super efficient” development program that is set to be unveiled next year could surprise the market.
DVN stock has been in a long-term bear market since falling from its 2008 high near $130. However, shares recently double-bottomed around $36, and Wednesday’s break above the resistance line at about $45.50 on very high volume is solid evidence a true bottom has been established.
MACD issued a strong buy signal, and my proprietary indicator, the Collins-Bollinger Reversal (CBR), flashed a buy signal six sessions before.
Buy DVN stock under $47 with a price target of $60 for a potential gain of nearly 28% in four months. The company also pays a quarterly dividend of 24 cents per share for a forward annual yield of 2.1%.
