Some Analysts Just Cut Their Devon Energy Corporation (NYSE:DVN) Estimates

Today is shaping up negative for Devon Energy Corporation (NYSE:DVN) shareholders, with the analysts delivering a substantial negative revision to this year's forecasts. There was a fairly draconian cut to their revenue estimates, perhaps an implicit admission that previous forecasts were much too optimistic.

Following the downgrade, the consensus from 17 analysts covering Devon Energy is for revenues of US$11b in 2024, implying a substantial 22% decline in sales compared to the last 12 months. Statutory earnings per share are anticipated to dip 5.7% to US$4.99 in the same period. Previously, the analysts had been modelling revenues of US$15b and earnings per share (EPS) of US$5.26 in 2024. It looks like analyst sentiment has fallen somewhat in this update, with a sizeable cut to revenue estimates and a small dip in earnings per share numbers as well.

View our latest analysis for Devon Energy

Analysts made no major changes to their price target of US$57.95, suggesting the downgrades are not expected to have a long-term impact on Devon Energy's valuation.

These estimates are interesting, but it can be useful to paint some more broad strokes when seeing how forecasts compare, both to the Devon Energy's past performance and to peers in the same industry. We would highlight that sales are expected to reverse, with a forecast 28% annualised revenue decline to the end of 2024. That is a notable change from historical growth of 23% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the same industry are forecast to see their revenue grow 2.1% annually for the foreseeable future. It's pretty clear that Devon Energy's revenues are expected to perform substantially worse than the wider industry.

The Bottom Line

The most important thing to take away is that analysts cut their earnings per share estimates, expecting a clear decline in business conditions. Unfortunately analysts also downgraded their revenue estimates, and industry data suggests that Devon Energy's revenues are expected to grow slower than the wider market. Often, one downgrade can set off a daisy-chain of cuts, especially if an industry is in decline. So we wouldn't be surprised if the market became a lot more cautious on Devon Energy after today.

So things certainly aren't looking great, and you should also know that we've spotted some potential warning signs with Devon Energy, including a weak balance sheet. Learn more, and discover the 2 other warning signs we've identified, for free on our platform here.

We also provide an overview of the Devon Energy Board and CEO remuneration and length of tenure at the company, and whether insiders have been buying the stock, here.

Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.

This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.