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Devon Energy Corporation (NYSE:DVN) Analysts Just Slashed This Year's Revenue Estimates By 11%

One thing we could say about the analysts on Devon Energy Corporation (NYSE:DVN) - they aren't optimistic, having just made a major negative revision to their near-term (statutory) forecasts for the organization. Revenue estimates were cut sharply as the analysts signalled a weaker outlook - perhaps a sign that investors should temper their expectations as well.

Following the latest downgrade, the current consensus, from the eleven analysts covering Devon Energy, is for revenues of US$14b in 2022, which would reflect a noticeable 4.4% reduction in Devon Energy's sales over the past 12 months. Statutory earnings per share are presumed to bounce 57% to US$8.43. Before this latest update, the analysts had been forecasting revenues of US$16b and earnings per share (EPS) of US$8.40 in 2022. So there's been a clear change in analyst sentiment in the recent update, with the analysts making a substantial drop in revenues and reconfirming their earnings per share estimates.

Check out our latest analysis for Devon Energy

earnings-and-revenue-growth
earnings-and-revenue-growth

The consensus has reconfirmed its price target of US$80.07, showing that the analysts don't expect weaker sales expectationsthis year to have a material impact on Devon Energy's market value. The consensus price target is just an average of individual analyst targets, so - it could be handy to see how wide the range of underlying estimates is. There are some variant perceptions on Devon Energy, with the most bullish analyst valuing it at US$102 and the most bearish at US$48.00 per share. Note the wide gap in analyst price targets? This implies to us that there is a fairly broad range of possible scenarios for the underlying business.

Taking a look at the bigger picture now, one of the ways we can understand these forecasts is to see how they compare to both past performance and industry growth estimates. These estimates imply that sales are expected to slow, with a forecast annualised revenue decline of 5.8% by the end of 2022. This indicates a significant reduction from annual growth of 2.1% over the last five years. By contrast, our data suggests that other companies (with analyst coverage) in the industry are forecast to see their revenue decline 4.6% annually for the foreseeable future.

The Bottom Line

The most obvious conclusion from this consensus update is that there's been no major change in the business' prospects in recent times, with analysts holding earnings per share steady, in line with previous estimates. Unfortunately analysts also downgraded their revenue estimates, although the forecast result is still roughly in line with that of 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.

As you can see, the analysts clearly aren't bullish, and there might be good reason for that. We've identified some potential issues with Devon Energy's financials, such as recent substantial insider selling. Learn more, and discover the 4 other concerns 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.

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