JPMorgan lifts Diamondback Energy target to $212, keeps Overweight

On Wednesday, JPMorgan updated its outlook on Diamondback Energy (NASDAQ:FANG), increasing the stock’s price target from $207.00 to $212.00 and reaffirming its Overweight rating. The revision follows the incorporation of Diamondback’s fourth-quarter results for 2024 and its recently provided guidance into JPMorgan’s estimates. Currently trading near its 52-week low of $151.69, InvestingPro analysis suggests the stock is undervalued, with analyst targets ranging from $168 to $245.

The firm’s analysts revised their earnings per share (EPS) estimates for Diamondback for the years 2025 and 2026 to $14.50 and $13.61, respectively, up from the previous estimates of $14.49 and $13.35. Similarly, cash flow per share (CFPS) estimates for the same years were adjusted to $32.81 and $32.49 from $32.23 and $31.41, respectively. The company has demonstrated strong financial performance with a 38.5% revenue growth and maintains a healthy dividend yield of 5.46%. InvestingPro subscribers can access 7 additional key insights about Diamondback’s financial health and growth prospects.

JPMorgan’s model for Diamondback Energy is based on oil and gas price assumptions of $69.86 per barrel and $3.53 per thousand cubic feet (Mcf) for 2025, and $66.69 per barrel and $3.90 per Mcf for 2026. The updated price target reflects a positive outlook on the company’s financial performance over the next couple of years.

The Overweight rating indicates that JPMorgan views Diamondback Energy’s stock as a better value than the average stock in the analyst’s coverage universe. The firm believes that the company’s shares could outperform the average return of the stocks JPMorgan covers over the next 6 to 12 months.

The price target increase signifies JPMorgan’s confidence in Diamondback Energy’s ability to deliver solid financial results, driven by its performance and market conditions as projected in their revised estimates. Investors often view such updates from analysts as indicators of a stock’s future performance, although market conditions and company performance can change and affect stock prices.

In other recent news, Diamondback Energy reported stronger-than-expected financial results for the fourth quarter of 2024. The company’s earnings per share (EPS) reached $3.64, surpassing the forecasted $3.45, while revenue hit $3.71 billion, exceeding the anticipated $3.55 billion. Analysts from UBS and TD Cowen maintained their Buy ratings on Diamondback Energy, with price targets set at $216 and $225, respectively. UBS highlighted the company’s operational efficiency and reduced capital expenditure guidance, while TD Cowen noted the improved well performance and cost savings from synergies with Endeavor.

Diamondback Energy’s capital expenditures were reported to be 7% lower than the consensus, attributed to drilling and completion expenses falling below $600 per foot. The company has projected oil production of approximately 492 thousand barrels per day for 2025, which is slightly below TD Cowen’s estimates. In addition, Diamondback Energy plans a capital budget of $3.6 billion to $4 billion for 2025, with a focus on drilling approximately 520-540 wells annually. The company is also exploring a joint venture for power generation, indicating a strategic move towards operational improvements.

Analysts have shown confidence in Diamondback Energy’s strategic initiatives, particularly its ability to derive value from mergers and acquisitions, and maintain a strong market position. Investors are likely to monitor the company’s cost management strategies and production outputs closely in the coming months.

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