Freedom Capital Markets initiated coverage on Evolution Petroleum Corporation (NYSE: EPM) with a Buy rating and a price target of $5.30, citing improving commodity fundamentals and the company's income-focused capital allocation strategy.

The analyst said the investment thesis was supported by expectations for a recovery in oil prices from current levels and rising demand for U.S. natural gas. Evolution Petroleum was described as a U.S.-focused oil and gas producer, with all of its revenue generated domestically.

The firm highlighted that Evolution's producing assets consisted entirely of non-operated interests, meaning operating partners controlled key decisions such as capital spending and production levels. Freedom Capital said this structure limited operational risk while allowing Evolution to maintain financial discipline.

The analyst also pointed to Evolution's shareholder return strategy, which included quarterly dividend payments. Based on the current share price, the stock offered an annualized dividend yield of approximately 12.8%, which was viewed as attractive relative to peers.