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The analyst states that the transaction adds 15kboed and 38k net acres to the company's existing 48kboed and 85k net acre Bakken position at ~4x free cash multiple on the next twelve-month strip.
Lovaglio adds that the balance sheet strength has enabled DVN to differentiate itself on cash return.
This all-cash deal is another means of delivering value from a position of strength, enabling a 13% regular dividend increase while extending plateau production from a legacy position, mentions the analyst.
Yesterday, a few other analyst firms raised the price on DVN after the acquisition announcement.
Stifel analyst Derrick Whitfield raised the price target to $93 (an upside of 27%) from $88 while maintaining a Buy rating on the shares.
Raymond James analyst John Freeman raised the price target to $102 (an upside of 39%) from $90 while maintaining the Strong Buy rating on the shares.
Credit Suisse analyst William Janela raised the price target to $82 (an upside of 12%) from $75 while maintaining the Outperform rating on the shares.
Truist analyst Neal Dingmann raised the price target to $103 (an upside of 40%) from $100 while maintaining the Buy rating on the shares.
Piper Sandler analyst Mark Lear raised the price target to $94 (an upside of 28%) from $89 while maintaining the Overweight rating on the shares.
Price Action: DVN shares are trading lower by 5.72% at $73.40 on the last check Friday.
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