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Investing.com - Piper Sandler has reiterated an Overweight rating on Diamondback Energy (NASDAQ:FANG) with a price target of $222.00, citing the company’s operational consistency and efficiency improvements. According to InvestingPro analysis, the stock appears undervalued at current levels, with analysts maintaining a strong buy consensus recommendation of 1.48 out of 5.
The research firm highlighted Diamondback’s strong start to fiscal year 2025, with six-month oil production volumes remaining steady at 133 thousand barrels (normalized to 12,000-foot laterals), matching 2024 levels and showing consistency with prior years. The company has increased its three-mile lateral completions to 34% of year-to-date total, up significantly from 11-12% in fiscal years 2023 and 2024. This operational efficiency has contributed to impressive revenue growth of 49.77% over the last twelve months, as reported by InvestingPro.
Diamondback has achieved notable drilling and completion efficiencies following its Endeavor acquisition, with current Midland well costs decreasing to approximately $570 per foot from $580 per foot at the start of the year and about $600 per foot when the deal closed in the second half of 2024.
Piper Sandler noted that Diamondback stock trades at a discount to large-cap exploration and production peers, with fiscal year 2026 estimated free cash flow to enterprise value at 10.8% compared to 7-9% for oil-weighted peers including ConocoPhillips (NYSE:COP), EOG Resources (NYSE:EOG), and Occidental Petroleum (NYSE:OXY).
The firm expects that Diamondback’s integration of STR assets and planned non-core asset sales in the second half of 2025 will help close this valuation gap in the near term. InvestingPro data shows the company maintains a healthy financial position with a "GOOD" overall score, while offering a 2.9% dividend yield that has been maintained for 8 consecutive years. For detailed analysis and additional insights, investors can access the comprehensive Pro Research Report, available exclusively to InvestingPro subscribers.
In other recent news, Diamondback Energy reported its second-quarter earnings for 2025, revealing a mixed performance. The company missed its earnings per share (EPS) forecast, reporting $2.67 compared to the expected $2.86. However, it exceeded revenue expectations with actual revenue of $3.68 billion, surpassing the forecast of $3.38 billion. Following the acquisition of Sitio Royalties Corp (NYSE:STR) by its subsidiary Viper Energy (NASDAQ:VNOM), Diamondback raised its third-quarter production guidance to include contributions from the new assets. Meanwhile, Raymond (NSE:RYMD) James lowered its price target for Diamondback Energy to $212, maintaining a Strong Buy rating, and noted an increase in the company’s production guidance and a reduction in capital expenditure. Melius Research initiated coverage with a Buy rating and a $213 price target, highlighting Diamondback’s operations in the Permian Basin. CFRA also adjusted its price target to $181, maintaining a Buy rating but revising its EPS outlook downward. These developments reflect a period of significant activity and adjustments for Diamondback Energy.
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