Feb. 5 at 12:33 PM
$DVN DVN raised at Barclays as 'too cheap and too large to ignore' ahead of merger. Barclays upgraded shares to Overweight from Equal Weight with a
$50 price target, saying its "transformative" merger with (CTRA) "creates a differentiated E&P rate-of-change story driven by synergy capture, portfolio optimization, and a step-function improvement in long-term cash returns." Barclays Jeanine Wai believes Devon (DVN) and (CTRA) enter the deal "as independent resilient companies defined by consistent operational execution, fortress balance sheets, and robust FCF that could have continued to reward shareholders. Wai wrote, noting that "by any reasonable measure, the FCF generation capacity of the pro forma entity is substantial... Layer in the announced synergies (we bake in ~90% of the
$1B by 2028), and we estimate the combined entity could generate a higher unlevered FCF yield of ~13% in 2027, ramping to 14% in 2028 before any asset rationalization or incremental efficiencies."
