Devon Energy (NYSE: DVN) has been outperforming the broader market, with its stock surging 16% since the beginning of 2024, compared to the S&P 500's 6.3% rise during the same period.
Analyst Biju Perincheril of Susquehanna believes there's further potential for Devon Energy's stock to climb, recently raising his price target on the company's shares by 25% to $65 from $52. With Devon Energy's current share price at $52.56, Perincheril's revised target implies a potential upside of 23.7% over the next year.
Susquehanna's more bullish outlook stems from its updated estimates for the exploration and production sector of the oil industry, anticipating companies to ramp up energy production.
This outlook forms the basis for Susquehanna's upward revision of Devon Energy's price target.
While investors may be drawn to Devon Energy's increased price target, it's important to note that analysts like Susquehanna often have shorter time horizons compared to long-term investors.
Therefore, their optimistic outlook may be focused on relatively near-term results. However, Devon Energy remains an attractive option for income investors seeking to bolster their passive income streams. The company currently offers a forward dividend yield of 4.7%.
Notably, Devon Energy's dividend policy includes a fixed dividend payment alongside a variable dividend based on excess free cash flow
This unique approach makes it appealing for income investors interested in the energy sector, particularly as the company targets to return 70% of its excess 2024 free cash flow to investors.