Devon Energy should continue to rally even if the oil rally fizzles as bullish catalysts line up for the stock — including the closing of its merger with Coterra — according to Jefferies. The investment firm upgraded the oil and gas producer to buy from hold. It also raised its price target on shares to $62 from $53, implying 37% upside from Thursday's close. Devon is "too cheap to ignore with catalysts," analyst Lloyd Byrne said Thursday in a note to clients. "Pullbacks in the front of the oil curve create opportunity, and DVN has multiple catalysts for absolute and relative outperformance post-[merger] close." Indeed, Devon trades at a forward price-to-earnings ratio of 8.28, according to FactSet. That's well below the S & P 500's multiple of more than 21. Oil prices have recently pulled back amid a tenuous ceasefire between the U.S. and Iran . U.S. West Texas Intermediate futures were last trading at $94.94, or nearly 7% lower for the week. Futures contracts expiring later in the year also point to lower prices. However, the stock — up 24% year to date — will get a boost after it completed its merger with Coterra Energy, which closed this week. The deal should produce roughly $1 billion in synergies, likely boosting Devon stock, according to Jefferies. DVN YTD mountain Shares are up 24% in the year to date. The company also seems likely to divest from non-core assets such as Marcellus Shale, which could "eliminate debt and boost returns," according to the analyst. Jefferies' call falls in line with consensus on the Street. Of the 28 analysts covering Devon, 24 have a buy or strong buy on the stock, LSEG data shows.
