Outperforming the 6.3% rise of the S&P 500 so far in 2024, energy specialist Devon Energy (DVN 0.16%) powered 16% higher from the start of the year.
And Biju Perincheril, an analyst at Susquehanna, thinks that there's even more room for the oil and gas producer's stock to run. Perincheril this week raised his price target on shares of Devon Energy by 25% to $65 from $52. Based on the stock's current share price of $52.56, Perincheril's price target implies an upside of 23.7% over the next 12 months or so.
The basis for the more auspicious outlook
Updating its estimates for the exploration and production niche of the oil industry, Susquehanna foresees companies committing to increasing energy production. This, in part, forms the basis for Susquehanna's upwardly revised price target on Devon Energy, according to financial news website The Fly.
Come for the higher price target, stay for the dividends
For energy investors who have Devon Energy on their radars, Susquehanna's higher estimate for the company's stock is surely an encouraging bit of news. It's important, however, to remember that analysts frequently have time horizons much shorter than the multiyear holding periods that the Motley Fool favors, so it's wise to remember that Susquehanna's optimistic outlook is focused on relatively short-term results.
That being said, Devon Energy is certainly a worthy addition to the portfolios of income investors looking to fortify their passive income streams. The stock has a forward dividend yield of 4.7% right now. The company's innovative dividend policy pairs a fixed dividend payment with a variable dividend based on excess free cash flow. That makes it a great option for income investors willing to play in the oil patch -- especially with the company targeting to return 70% of excess 2024 free cash flow to investors.
