Evercore ISI lifts Viper Energy stock price target after acquisition

On Tuesday, Evercore ISI analysts raised the price target for Viper Energy (NASDAQ:VNOM) stock to $51 from $49 while maintaining an Outperform rating. Currently trading at $41.38, with a market capitalization of $12 billion, InvestingPro data shows the stock trading at an attractive P/E ratio of 10.8x. This follows Viper Energy’s announcement of its acquisition of Sitio Royalties, valuing the latter at $4.1 billion.

The acquisition is expected to enhance Viper Energy’s size and scale, reduce its dividend breakeven to below $20 per barrel, and increase production per share by 10%. With a healthy dividend yield of 5.96% and strong financial health score according to InvestingPro, the company maintains a robust current ratio of 8.7x. Viper Energy shares modestly outperformed the market group today, with analysts noting the shares appear cheaper on a relative basis post-acquisition.

The transaction is seen as modestly accretive to the net asset value, considering the producing value from Sitio Royalties and undeveloped locations in the Permian Basin. The acquisition solidifies Viper Energy’s position as a leading consolidator in the Permian, with ongoing opportunities in the $300-500 million deal size range on the private side.

Viper Energy also announced a $1.5 billion debt target in conjunction with the deal. The company aims to achieve this target organically by the end of 2026, assuming oil prices remain between $55 and $60. Additionally, asset sales outside the Permian could provide further flexibility to support the stock through opportunistic share buybacks and continued deleveraging.

In other recent news, Viper Energy reported a strong performance for the first quarter of 2025, surpassing earnings expectations with an earnings per share (EPS) of $0.54, compared to the forecast of $0.45. The company’s revenue also exceeded projections, reaching $245 million against the anticipated $234.79 million. In a significant development, Viper Energy announced an all-equity acquisition of Sitio Royalties Corp (NYSE:STR), valued at approximately $4.1 billion, which includes Sitio’s net debt of $1.1 billion. This strategic move is expected to position Viper Energy as a leading entity in the North American mineral and royalty space. Texas Capital Securities maintained its Buy rating for Viper Energy, citing the potential for over $50 million in synergies from the acquisition. Meanwhile, Raymond (NSE:RYMD) James raised its price target for Viper Energy shares to $54, maintaining an Outperform rating following the company’s operational expansion. Evercore ISI also resumed coverage with an Outperform rating and a $49 price target, noting Viper’s ability to maintain volume guidance despite reduced activity from its parent company. Additionally, Viper Energy’s board approved a 10% increase to its base dividend, reflecting confidence in the transaction’s potential benefits.

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