UBS maintains Buy on Diamondback Energy, target at $216

On Tuesday, Diamondback Energy shares (NASDAQ:FANG) maintained a Buy rating from UBS, with a steady price target of $216.00. The firm’s analysts highlighted Diamondback’s positive fourth-quarter 2024 results, which featured cash flow per share (CFPS) that exceeded expectations due to total and oil production surpassing the upper range of the company’s guidance. Additionally, Diamondback’s cash unit costs were reported to be lower than anticipated. The company’s strong performance is reflected in its impressive 18.25% revenue growth and healthy P/E ratio of 8.86. According to InvestingPro data, eight analysts have recently revised their earnings estimates upward for the upcoming period.

The analysts at UBS emphasized the company’s outlook for 2025, noting a reduction in capital expenditure (capex) guidance even with the inclusion of new DE4 oil volumes. This adjustment is seen as a testament to Diamondback Energy’s consistent ability to derive value from mergers and acquisitions (M&A) and to benefit from the expansion of its operations in the Midland region.

The UBS statement reflected confidence in Diamondback Energy’s strategic moves, stating, "This continues to highlight FANG’s ability to create value through M&A and continued benefits of growing Midland scale." The analysts’ reiteration of the Buy rating follows the company’s demonstration of operational efficiency and financial performance that outstripped market forecasts.

Investors are likely to keep an eye on Diamondback Energy as it navigates the energy sector with a strategy that has been recognized for its potential to enhance shareholder value. The company’s ability to manage costs effectively while expanding its production capabilities could continue to be a focal point for analysts and investors alike in the coming months.

In other recent news, Diamondback Energy reported impressive fourth-quarter 2024 results, with earnings per share reaching $3.64, surpassing the expected $3.45. The company’s revenue also exceeded forecasts, coming in at $3.71 billion against the anticipated $3.55 billion. This strong performance was attributed to efficient operations and strategic investments, including the acquisition of assets in the Southern Midland Basin. Additionally, Diamondback Energy has set a capital budget of $3.6 billion to $4 billion for 2025, planning to drill 520-540 wells annually. Analyst firm TD Cowen maintained its Buy rating for Diamondback Energy, with a price target of $225, highlighting the company’s efficiency gains and robust return on capital. The firm noted that Diamondback’s capital expenditures were 7% lower than consensus estimates, due to cost savings from synergies with Endeavor. Looking forward, Diamondback Energy projects oil production to be approximately 492 thousand barrels per day in 2025, slightly below TD Cowen’s estimate.

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