Devon Energy just upgraded at JPMorgan, here’s why

JPMorgan upgraded Devon Energy to Overweight from Neutral with a price target of $58, up from $57. Improved macro prospects for the oil and gas exploration and production group stem from efficiency gains and deflationary tailwinds, which are more than offsetting modest declines in well productivity and should lead to better overall capital efficiency in 2024, the analyst tells investors in a research note. In addition, the firm thinks the potential for more mergers and accusations given the industry’s “thirst for sticks on the map could keep a floor on valuations.” Given the “mixed macro backdrop,” JPMorgan thinks stock selection will be paramount to drive alpha next year. Its rating changes reflects updates to its “forced ranking” system on key valuation, cash flow, cash return, and balance sheet metrics going into 2024.