Jefferies reinstates Diamondback Energy with hold, sets stock target

EditorNatashya Angelica
Published 16/09/2024, 14:14
FANG
-


On Monday, Diamondback Energy (NASDAQ:FANG) shares received a reinstated coverage from Jefferies with a Hold rating and a new stock price target set at $18.00. The firm highlighted Diamondback Energy as the premier pure-play Permian producer, succeeding Pioneer Natural Resources (NYSE:PXD) in this tier.


The analysis pointed to the company's recent acquisition of Endeavor as a significant improvement, citing Diamondback's leading operational capabilities as a factor that could enhance the merger's synergy potential.


The analyst noted that the transformative nature of Diamondback's latest acquisition is already partly factored into the company's current market valuation. The market's attention, according to the firm, is presently on the Stephen family's stake and the timing of their involvement, which is considered to be a temporary situation.


Diamondback Energy's strategic move to acquire Endeavor has been recognized as a catalyst for potential growth. The firm's operations are expected to benefit from the merger, as it allows Diamondback to apply its industry-leading operational practices to a larger asset base, potentially increasing the efficiency and profitability of the combined entity.


The price target of $18.00 suggests a level of caution from Jefferies, reflecting a conservative stance on the stock's near-term growth prospects. The Hold rating implies that the firm advises investors to maintain their current positions in Diamondback Energy, without making additional investments or divesting their holdings at this time.


Investors and market watchers will likely keep an eye on Diamondback Energy's performance following the Endeavor acquisition, as well as any changes in the ownership structure related to the Stephen family, to gauge the future direction of the stock.


In other recent news, Viper Energy (NASDAQ:VNOM) has announced its acquisition of Tumbleweed Royalty assets for $650 million, a move expected to enhance its position in the Permian Basin. The deal includes a cash component of $461 million and around 10.1 million units of Viper Energy Partners LLC, with additional contingent cash consideration based on 2025 oil prices.


The acquisition is expected to close early in the fourth quarter of 2024. In related news, Viper Energy is also offering 8.5 million shares of its Class A common stock to partially fund the acquisition. Goldman Sachs & Co (NYSE:GS). LLC, BofA Securities, and Truist Securities are managing the offering.


Meanwhile, Diamondback Energy has recently completed its merger with Endeavor Energy Resources, a development expected to enhance its position in the North American oil market. Analysts at KeyBanc Capital Markets maintained an Overweight rating on Diamondback Energy shares, citing the completed acquisition of Endeavor Energy Resources and an increased estimated EBITDA for 2024.


In recent developments, both Viper Energy and Diamondback Energy have been part of a trend where US shale companies are achieving higher crude oil production levels despite using fewer rigs. This is expected to contribute to an increase in global oil market supplies.


Diamondback Energy also highlighted its operational efficiencies and financial flexibility in its second quarter 2024 earnings call, announcing increased production guidance and a raised capital expenditure budget.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

Latest comments

Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers
© 2007-2024 - Fusion Media Limited. All Rights Reserved.