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Investing.com - William Blair initiated coverage on Diamondback Energy (NASDAQ:FANG) with an Outperform rating on Monday. The $41.46 billion market cap company is currently trading below its Fair Value according to InvestingPro analysis, with a P/E ratio of 10.15x.
The research firm highlighted Diamondback’s "best-in-class cost structure" and operational efficiencies, which generate the highest free cash flow per barrel of oil equivalent among its upstream peers. This efficiency is reflected in the company’s impressive 75.42% gross profit margin and nearly 50% year-over-year revenue growth.
William Blair noted that the company maintains a low reinvestment rate of 40%, which contributes to increased free cash flow, while its strong financial position provides flexibility for capital allocation, including opportunistic share buybacks.
The firm pointed to Diamondback’s large mineral subsidiary, Viper Energy, as providing "unparalleled upside" potential for the company.
According to William Blair, Diamondback benefits from economies of scale with 24-well average projects and maintains the highest realized cash margins in its peer group at an average of 73%, along with the lowest total operating cash expenses.
In other recent news, Diamondback Energy has made several strategic moves and adjustments that are noteworthy for investors. The company has revised its third-quarter 2025 production guidance upward following the acquisition of Sitio Royalties Corp by its subsidiary, Viper Energy. This adjustment accounts for the additional production from the Sitio assets starting from August 19. Additionally, Raymond James maintained a Strong Buy rating for Diamondback Energy but lowered its price target to $212, highlighting the company’s increased production guidance and reduced capital expenditure budget for fiscal year 2025.
CFRA also adjusted its outlook for Diamondback Energy, lowering the price target to $181 while maintaining a Buy rating, in light of a revised earnings per share forecast. Melius Research initiated coverage on Diamondback with a Buy rating and a $213 price target, emphasizing its operational focus in the Permian Basin. Meanwhile, Piper Sandler reiterated an Overweight rating with a $222 price target, citing the company’s operational consistency and efficiency improvements. These developments reflect Diamondback Energy’s strategic adjustments and market position, as highlighted by various analyst firms.
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