Mizuho Securities analyst Nitin Kumar CFA has reiterated their bullish stance on FANG stock, giving a Buy rating yesterday.
Nitin Kumar CFA has given his Buy rating due to a combination of factors that indicate Diamondback’s (FANG) strong operational and financial execution. Despite a minor regulatory setback with the FTC, Diamondback exceeded free cash flow expectations, resulting in a significant variable dividend on top of its base dividend. Their share repurchase was modest, yet the company’s commitment to return 50% of free cash flow to shareholders remains firm. Additionally, the anticipated integration with Endeavor is well accounted for in their financial planning, with the acquisition expected to close by the end of the year, as indicated in their unchanged net asset value-based price target.
The reaffirmation of their capital budget and production guidance, despite a one-time increase in cash G&A and anticipated higher interest expenses, further supports the positive outlook. Diamondback has also introduced second-quarter guidance that slightly surpasses previous estimates and maintained capital expenditures. Kumar’s valuation reflects a slight premium compared to peers, which is justified by Diamondback’s robust execution and inventory depth. Despite some adjustments for higher interest expenses due to new debt, the company’s EBITDA estimates remain relatively stable, reinforcing the Buy rating.
In another report released yesterday, Piper Sandler also maintained a Buy rating on the stock with a $247.00 price target.
FANG’s price has also changed moderately for the past six months – from $159.410 to $196.010, which is a 22.96% increase.
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Diamondback (FANG) Company Description:
Diamondback Energy, Inc. is an independent oil and natural gas company, which engages in the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves. It operates through the Upstream and Midstream Services segments. The Upstream segment focuses on the Permian Basin operations in West Texas. The Midstream Services segment involves in the Midland and Delaware Basins. The company was founded in December 2007 and is headquartered in Midland, TX.
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