Diamondback Energy stock rating reiterated at Buy by UBS ahead of 2Q results

Investing.com - UBS has reiterated its Buy rating and $163.00 price target on Diamondback Energy (NASDAQ:FANG) ahead of the company’s second-quarter 2025 earnings report, scheduled for August 4. According to InvestingPro data, the stock appears undervalued, with analyst targets ranging from $141 to $228 and a strong consensus recommendation of 1.45 (Buy).

The firm expects Diamondback to deliver strong operational results in the second quarter, with oil production volumes likely to reach the higher end of the company’s guidance range. The company has demonstrated robust financial performance, maintaining a healthy 75.5% gross margin and an attractive P/E ratio of 8.4x.

UBS believes Diamondback’s full-year 2025 outlook, which was updated during the first-quarter earnings call, will remain unchanged unless West Texas Intermediate (WTI) crude oil prices fall below $60 per barrel.

The investment bank sees potential for further capital expenditure reductions at Diamondback due to improving capital efficiencies, while maintaining the current production outlook.

UBS also anticipates updates from Diamondback regarding its dropdown and monetization plans during the upcoming earnings report.

In other recent news, Viper Energy (NASDAQ:VNOM) announced the pricing of $1.6 billion in senior notes as part of its debt refinancing strategy. The proceeds are intended for general corporate purposes and to redeem existing notes, with further plans to repay Sitio Royalties’ debt if their acquisition is finalized. This move aligns with Viper Energy’s strategic acquisition of Sitio Royalties Corp (NYSE:STR) in a $4.1 billion all-equity transaction, which includes Sitio’s net debt. The acquisition is expected to enhance cash available for distribution and lower breakeven costs, marking a significant expansion in the mineral and royalty space. Diamondback Energy, Viper’s parent company, has also extended its credit agreement to 2030, securing long-term financial stability with improved interest rates. UBS analysts maintained a Buy rating on Diamondback Energy, citing the positive impact of the VNOM deal on cash flow and production growth. Additionally, Diamondback Energy announced executive changes, with Travis D. Stice transitioning to Executive Chairman and Kaes Van’t Hof appointed as the new CEO. These developments reflect strategic shifts and financial maneuvers within both companies, highlighting their ongoing efforts to strengthen their market positions.

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