Investing.com -- Benchmark upgraded Devon Energy Corporation (NYSE: DVN ) to "Buy" from "Hold" with a price target of $44, given company’s improved execution, share buybacks, and a reduced focus on M&A.

“We are raising our rating with DVN’s reversal of type curve deterioration and policies that we have been critical of,” analyst said.

Shares of Devon have underperformed, falling 14% in the past quarter, compared to a 3% decline in the Energy Select Sector SPDR Fund. Benchmark expects Devon's operational beats and buybacks to drive stock performance now that M&A distractions are deprioritized.

“The variable dividend is as good as over, replaced by share buybacks,” analyst wrote.

Devon has replaced its variable dividend, deemed ineffective by investors, with share buybacks. Free cash flow of $3.6 billion is projected for 2024, supporting increased base dividends, debt repayment, and accelerated buybacks beyond the current $200-$300 million quarterly pace.

Tailwinds include stronger gas and NGL realizations, aided by weather-driven demand, exports, and tighter supply, which are expected to improve regional pricing after last year’s challenges.