Devon Energy May Be Entering A Favorable Commodities Market In 2025
Contributor since 2022 / 5036 Followers
Summary:
- 2025’s commodity price outlook looks good for Devon Energy; expectations of a slight fall in oil prices is more than offset by projections of rising natural gas and NGL prices.
- Drilling activities’ efficiency improvements are resulting in lower capex intensity, which bodes well for FCF return profiles.
- Valuations are undemanding as DVN trades at a larger-than-usual discount vs peers on a 1-yr fwd PE basis.
- DVN vs SPX500 is in an incumbent downward multi-quarter downflow, but has reached a key support level. I anticipate some sideways consolidation ahead.
- The recent fall in the stock has been driven by multiples de-rating whilst earnings expectations have remained stagnant. I’d like to see an uptick in earnings upgrades to have a fundamentals boost for buys.
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Thesis
Devon Energy (NYSE:DVN) caught my eye due to its low valuations. Here’s how I’m looking at the stock:
- The commodity price outlook is favorable for Devon’s overall portfolio
- Efficiency improvements are resulting in lower capex intensity, which bodes well for
Analyst’s Disclosure: I/we have a beneficial long position in the shares of VOO either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.
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