Devon Energy Downgraded by Bernstein Following Post-Merger Earnings
Sanford C. Bernstein downgraded Devon Energy to a Hold rating. The move follows Devon's third-quarter earnings report, raised merger synergy targets, and plans to accelerate share repurchases.
Devon Energy Corporation saw its stock rating cut from strong-buy to hold by research analysts at Sanford C. Bernstein in a report released on Wednesday, according to Zacks. The downgrade comes alongside other recent analyst actions, including UBS Group reducing its price target on the shares from $65.00 to $62.00 while keeping a buy rating. MarketBeat reports an overall consensus rating of Moderate Buy with an average price target of $60.49.
The rating change follows Devon Energy's third-quarter earnings release on Thursday, November 5th. The company posted earnings per share of $1.42, beating analyst expectations. Quarterly revenue reached $6.86 billion, climbing 66.5% year over year. However, reports differed on how revenue compared to forecasts, with one citing expectations of $6.57 billion while another noted a consensus estimate of $7.33 billion.
The period marked Devon's first full quarter of combined operations after completing its merger with Coterra Energy in May 2026. Devon achieved record total and oil production, propelled by operations in the Permian Basin and added Marcellus gas volumes. Following the combination, management lifted its year-end 2026 annualized synergy run rate target to approximately $350 million. The company expects average synergies of roughly $700 million in 2027 and at least $1 billion annualized by the end of that year.
Devon is also repositioning its asset base, having agreed on October 8th to sell its Eagle Ford assets for cash, with closing anticipated in early 2027. Proceeds will be directed toward reducing debt and accelerating share repurchases, which more than doubled during the third quarter. For 2027, preliminary plans target approximately $5.3 billion in capital spending, low-single-digit oil production growth, and total output of 1.6 million barrels of oil equivalent daily.
Shares of Devon Energy closed at $44.95 on Wednesday, up around 3.5%. Valuation signals remain mixed. GuruFocus estimated an intrinsic GF Value of $41.83, suggesting the shares were 7.5% overvalued and noting net insider sales of $5.4 million over the trailing 12 months. Meanwhile, regulatory disclosures from Monday, September 14th showed CEO Clay M. Gaspar purchased 3,913 shares for $199,876.04, while EVP Robert Ferrall Lowe III sold 6,756 shares for $344,218.20.