Key points:
- Devon Energy shares barely moved despite being downgraded at Bank of America.
- The energy company has positive ratings, with most analysts rating it a “strong buy.”
- DVN stock broke above a crucial resistance level to support further gains.
Shares of Devon Energy Corp (NYSE: DVN) edged about 1% lower after a Bank of America analyst downgraded the firm to neutral from a buy and maintained his price target at $57.
However, DVN stock did not react significantly because many other analysts have buy ratings on the company, which helped neutralise the impact of the BofA downgrade.
For example, a Mizuho analyst raised his price target on Devon Energy to $61 from $59 and issued a buy rating on the stock on November 30, 2021.
Analysts at Benchmark raised their rating on the stock to a “buy” from “hold” and set their price target at $48 on November 3, 2021. The target has since been attained.
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I think for analysts, the 169% rally in Devon Energy shares over the past 12 months indicates that the company might be overvalued, which could be the main reason behind today’s downgrade.
However, as most seasoned investors know, a stock can trade in overvalued territory for months without incurring significant pullbacks.
A closer look at Devon Energy’s daily price chart indicates that the stock just broker above a crucial resistance around the $45 level, and the level is likely to act as support going forward.
Therefore, going forward, I would consider DVN stock in an uptrend so long as the price is trading above this crucial level. However, a break below the level could lead to further declines.
Still, we could get a deeper pullback to retest the support level before a proper rally ensues, taking Devon Energy shares to new highs this year.
Currently, the average analyst rating on Devon Energy is a “strong-buy” with an average price target of $53.28, representing a 10% premium to the stock’s current trading price of around $48.
Investors looking o establish new positions in the energy company could wait for a pullback to the $45 level before jumping in. I would wait for a deeper pullback like the one that happened in late December to jump in, but there are no guarantees we will get such a move.
*This is not investment advice. Always do your due diligence before making investment decisions.
Devon Energy (DVN) stock price.
Despite being downgraded by a Bank of America analyst, Devon Energy stock barely moved.