DVN Stock Falls Premarket, But This Analyst Sees 37% Upside Amid Bullish Oil Backdrop

• Barclays said that depleting inventories, shrinking OPEC spare capacity, and a "muted" U.S. production response to the Middle East war are reinforcing a tighter oil macro backdrop that is not fully reflected in equities.
• Last week, Morgan Stanley raised the firm's price target on Devon Energy to $66 from $59 and maintained an ‘Overweight’ rating on the shares.
• The shale producer also acquired ‌16,300 net undeveloped acres in the Delaware Basin in New Mexico through a federal lease earlier this month.

Shares of Devon Energy Corp. (DVN) inched lower in Wednesday’s premarket session after closing down more than 4% in the previous session as softer global oil prices and a major Delaware Basin land acquisition pressured sentiment.

The stock is also on track for its first monthly decline of the year.

However, despite the pullback, Wall Street has turned optimistic on the energy company. Barclays raised the price target on Devon Energy to $62 from $54 and kept an ‘Overweight’ rating on the shares. The revised target indicates an upside potential of more than 37% from its previous close.

DVN Stock: Wall Street Bet

Barclays said that depleting inventories, shrinking OPEC spare capacity, and a "muted" U.S. production response to the Middle East war are reinforcing a tighter oil macro backdrop that is not fully reflected in equities. According to the analyst, this backdrop sets up the "oily" exploration and production companies for a share re-rating post-conflict.

Last week, Morgan Stanley raised the firm's price target on Devon Energy to $66 from $59 and maintained an ‘Overweight’ rating on the shares, as per TheFly.

According to data from Koyfin, the 26 analysts covering the stock have a 12-month average price target of $60.88 on Devon’s shares, indicating an upside potential of nearly 35%. Of them, 21 analysts have a ‘Buy’ or higher rating on the company’s shares, while the remaining five have a ‘Hold’ rating.

Devon Buys Delaware Acreage

Last week, the shale producer acquired ‌16,300 net undeveloped acres in the Delaware Basin in New Mexico through a federal lease. The $2.6 billion deal comes shortly after the company completed its merger with Coterra Energy, which extended its footprint to about 750,000 net acres in the basin across Texas and New Mexico.

The new acquisition will aid Devon to deepen its position in Delaware, ​adding about 400 net drilling locations normalized to two-mile ​laterals.

DVN Stock: Retail Stance

On Stocktwits, retail sentiment around DVN stock was in the ‘bearish’ territory at the time of writing.

One bullish user said, “Its a shakedown, don't let them get your shares.”

Another user said that the shares tanking after Morgan Stanley’s upgrade was “Classic…”

DVN shares have surged nearly 44% in the last 12 months.

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