On Friday, Truist Securities demonstrated confidence in Viper Energy (NASDAQ:VNOM) by increasing the stock’s price target to $78.00 from the previous $71.00, while reaffirming a Buy rating on the shares. This optimistic view aligns with broader analyst sentiment, as InvestingPro data shows five analysts have recently revised their earnings estimates upward, with the stock currently trading at $48.31. The firm’s analyst highlighted Viper Energy Partners’ advantageous position to potentially enhance its mineral interests by more than 25%, contingent on the contribution from mineral acreage and working interest assets. These assets are characterized by more than 75% net revenue interest and are operated and non-operated by parent company Diamondback (NASDAQ:FANG), which also holds a Buy rating.
The analyst anticipates that the substantial transaction of core minerals will be significantly beneficial to both Diamondback and Viper Energy. This expectation is reflected in the new Street high price target, marking an increase to $78 from $71. The analyst’s forecast is based on the premise that Viper Energy’s production will continue to outpace the average growth of its peers. The company’s strong financial position is evident in its impressive EBITDA of $770.82 million and attractive dividend yield of 5.09%. For deeper insights into VNOM’s valuation and growth potential, investors can access comprehensive analysis through InvestingPro’s detailed research reports.
Viper Energy’s shares are expected to gain additional support from their inclusion in various prominent market indices. This inclusion is seen as a positive move that could lead to wider visibility and potentially increased demand for the stock among institutional and retail investors.
The parent company, Diamondback, is expected to drop assets to Viper Energy, which could lead to a substantial increase in Viper’s mineral interests. This strategic move is likely to be highly accretive to both companies, according to the analyst’s assessment.
The analyst’s commentary underscores the potential for Viper Energy to capitalize on its strategic relationship with Diamondback. The anticipated asset drop and consequent expansion of mineral interests are set to position Viper Energy for higher than average production growth and enhanced market presence. This growth trajectory is particularly noteworthy given the company’s impressive 66.56% return over the past year. InvestingPro subscribers can access additional insights through exclusive financial health scores and valuation metrics, helping them make more informed investment decisions.
In other recent news, Diamondback Energy has seen a favorable adjustment in its stock price target by JPMorgan, following an examination of the company’s operational efficiency and capital expenditure forecasts. The acquisition of Endeavor and subsequent improvements in field efficiency have prompted Diamondback to revise its 2025 production expectations to the upper end of its guidance range. In addition, Viper Energy Partners’ acquisition of Tumbleweed is anticipated to contribute an additional 4.5 MBo/d to 2025 production.
On the analyst front, Viper Energy has received upgrades from Evercore ISI and KeyBanc, setting their price targets at $58.00 and $62.00 respectively. Goldman Sachs and BofA Securities have also initiated coverage on the company, assigning it a Buy rating with price targets of $70.00 and $64.00. These upgrades are based on Viper Energy’s acquisition of over $4 billion in mineral interests from Diamondback and the company’s impressive track record of converting approximately 80% of its adjusted EBITDA to free cash flow.
JPMorgan anticipates Diamondback to generate $1,194 million in FCF for the fourth quarter, with cash returns comprising a $0.90 per share quarterly dividend and $334 million in share buybacks. These are the recent developments in Diamondback Energy and Viper Energy’s strategy and operations.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.