Evercore ISI resumes VNOM stock with Outperform, $49 target

On Tuesday, Evercore ISI analysts reinstated coverage of Viper Energy (NASDAQ:VNOM) with an Outperform rating and a $49.00 price target, joining seven other analysts who have recently revised their earnings estimates upward according to InvestingPro data. The firm’s analysts highlighted Viper Energy’s ability to maintain its 2025 volume guidance despite a reduction in activity from its parent company. The company maintains a healthy P/E ratio of 10.5x and operates with moderate debt levels. The completion of the Energy & Minerals Group (EER) dropdown transaction was noted, which has allowed Viper Energy to normalize net revenue interests (NRIs) across the EER and Diamondback Energy (NASDAQ:FANG) asset base, as well as the acquisition of additional mineral interests.

The analysts pointed out that Viper Energy’s strategy now likely shifts towards organic growth and how the business will perform as activity in the Permian Basin adjusts with commodity prices. The decision to reserve $25 million in cash during the first quarter was deemed prudent, and the current distribution implies a 5.3% yield. They also anticipate improvements in credit quality to continue aiding the cost of capital, with tangible benefits expected at the next issuance.

According to the analysts, Viper Energy’s market capitalization of approximately $8.78 billion is free of legacy structural or administrative issues that could limit ownership, making it an opportune time for a comprehensive evaluation. Based on InvestingPro’s Fair Value analysis, the stock currently appears to be trading near its fair value, with additional insights available in the comprehensive Pro Research Report, which offers detailed valuation metrics and peer comparisons. They suggested that while the market will likely focus on the state of operations by others (OBO activity), which constitutes approximately 50% of Viper Energy’s operations being ExxonMobil (NYSE:XOM) operated, there is a need to observe commodity price and activity levels to fully recognize the growth potential for 2026.

The report concluded by stating that market skepticism may fuel additional share buybacks. The analysts’ resumed coverage with a positive outlook, reflecting an updated evaluation of Viper Energy’s net asset value (NAV) following the recent transaction, which was already factored into their calculations. InvestingPro subscribers can access over 30 additional financial metrics and insights about Viper Energy, including detailed analysis of its financial health, which currently receives a "GOOD" overall rating.

In other recent news, Viper Energy reported impressive financial results for the first quarter of 2025, with earnings per share reaching $0.54, surpassing analyst forecasts of $0.45. The company’s revenue also exceeded expectations, totaling $245 million compared to the anticipated $234.79 million. Despite these positive results, the dividend was lower than expected at $0.57, which might have influenced investor sentiment. In addition to the earnings report, Viper Energy completed a significant dropdown transaction with Diamondback, enhancing its strategic positioning. Fitch Ratings upgraded Viper Energy to investment grade, which could potentially open new opportunities for capital access. Analysts from firms such as Goldman Sachs and Citi have shown interest in Viper Energy’s merger and acquisition strategy amid current market conditions. The company remains committed to exploring opportunities in the minerals market, with potential for dividend growth in a $60 oil environment. These developments highlight Viper Energy’s ongoing efforts to navigate market volatility and maintain its financial health.

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