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On Friday, RBC Capital Markets resumed coverage on Diamondback Energy (NASDAQ:FANG) shares, issuing an Outperform rating and setting a price target of $180.00. According to InvestingPro data, this aligns with broader analyst optimism, as 11 analysts have recently revised their earnings estimates upward. The stock, currently trading at $134.83, appears undervalued based on InvestingPro’s Fair Value analysis. The firm’s analysis suggests that Diamondback Energy’s core break-even (B/E) point is below $40 per barrel, positioning the company at the forefront of free cash flow (FCF) resilience within its peer group.
Despite recent market and commodity price fluctuations posing potential obstacles for the industry, RBC Capital Markets believes Diamondback Energy’s operational strategies are likely to remain unchanged unless oil prices consistently drop below $55 per barrel. The firm emphasized that the company is equipped to manage maintenance operations, return value to shareholders, and reduce its debt even with oil prices ranging between $50 and $55 per barrel.
The coverage reinstatement comes with a forward-looking strategy in case of further commodity price declines. RBC Capital Markets anticipates that Diamondback Energy would adjust its approach by slowing down the completion of new wells, accumulating a backlog of drilled but uncompleted (DUC) wells in anticipation of more favorable pricing, and prioritizing debt reduction in such scenarios.
Diamondback Energy’s strategic flexibility in response to varying oil prices is underlined by RBC Capital Markets’ assessment. The firm’s price target suggests confidence in the company’s ability to navigate the sector’s volatility while maintaining its commitment to operational efficiency and financial stability.
In other recent news, Diamondback Energy has been the focus of several analyst updates and financial insights. UBS recently adjusted its price target for Diamondback Energy to $163 while maintaining a Buy rating, following the company’s first-quarter 2025 operational update. Despite exceeding oil volume expectations, Diamondback’s gas and natural liquids production fell short. Mizuho (NYSE:MFG) Securities also revised its price target to $194, keeping an Outperform rating, while noting the company’s robust financial position and potential for shareholder returns through buybacks. Meanwhile, Citi upgraded Diamondback Energy to a Buy, raising the target to $180, highlighting the company’s operational efficiency and strategic initiatives, including potential asset sales and joint ventures.
CFRA took a more bullish stance, elevating Diamondback Energy’s rating to Strong Buy and increasing the price target to $204, citing undervaluation and potential relief from natural gas transportation bottlenecks. The company is also focusing on debt reduction and shareholder returns, supported by asset sales and operational strengths in the Permian Basin. Additionally, Viper Energy (NASDAQ:VNOM), a subsidiary of Diamondback, reported its first-quarter 2025 performance, with average production of 31,311 barrels of oil per day. Viper continues its stock repurchase program, with $427.6 million remaining in buyback authorization. These recent developments offer investors a detailed look into Diamondback Energy’s strategic and operational directions.
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