UBS reiterates Buy rating on Diamondback Energy stock ahead of Q3 earnings

Investing.com - UBS maintained its Buy rating and $171.00 price target on Diamondback Energy (NASDAQ:FANG) ahead of the company’s third-quarter 2025 earnings report. According to InvestingPro data, the stock appears undervalued, with 6 analysts recently revising earnings estimates upward. The company, currently valued at $41 billion, trades at a P/E ratio of 10.

The investment firm highlighted Diamondback Energy’s significant progress in operational efficiency improvements throughout the year, noting the company reduced its fiscal year 2025 cash capital expenditure by $500 million while maintaining relatively stable production volumes. This efficiency is reflected in the company’s impressive 75.4% gross profit margin and robust 49.8% revenue growth over the last twelve months.

UBS expects Diamondback to continue focusing on efficiency gains as the company remains in what it describes as a "yellow light scenario" or maintenance mode for operations.

The firm believes cost savings combined with proceeds from asset sales will drive near-term debt reduction for the energy producer.

These financial improvements could potentially lead to increased capital returns to shareholders in 2026, according to UBS’s analysis.

In other recent news, Diamondback Energy has been the subject of several analyst reviews and updates. RBC Capital raised its price target for the company to $173 from $160, maintaining an Outperform rating due to the management’s strategy to address commodity market uncertainty. Bernstein has reiterated its Outperform rating with a $192 price target, noting the company’s significant inventory life compared to competitors. KeyBanc also reiterated an Overweight rating with a $176 price target following Diamondback Energy’s asset transactions, which completed its deleveraging program after recent acquisitions.

William Blair initiated coverage with an Outperform rating, emphasizing Diamondback’s cost structure and operational efficiencies that lead to high free cash flow. Piper Sandler maintained its Overweight rating and set a $222 price target, highlighting the company’s operational consistency and efficiency improvements. The firm noted a strong start to fiscal year 2025, with stable oil production volumes and an increase in three-mile lateral completions. These developments reflect ongoing confidence in Diamondback Energy’s strategic and operational initiatives.

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