On Thursday, KeyBanc Capital Markets adjusted its outlook on Diamondback Energy (NASDAQ:FANG), increasing the price target to $210 from the previous $186 while maintaining an Overweight rating on the stock.
The firm's analysis points to a strong performance by Diamondback Energy shares, which have significantly outperformed the market since the beginning of the year, with a notable gain of 41% compared to the S&P Oil & Gas Exploration & Production Select Industry Index (XOP) which rose by 18%.
The revision in the price target comes after Diamondback Energy's recent financial moves, including the sale of shares in Viper Energy Partners (NASDAQ:VNOM), which added approximately $449 million in proceeds.
This sale, along with robust well productivity trends, has bolstered KeyBanc's bullish stance on the energy company. The analyst noted that Diamondback Energy's financial outlook is supported by various capital strategies that enhance its free cash flow, in addition to anticipated non-core asset sales slated for 2025.
Diamondback Energy's operational achievements are also highlighted, with the company showing improvements in well productivity within the Midland Basin. This is in contrast to broader industry trends, where other companies have seen productivity declines. Diamondback has managed to improve well output while also extending the lateral lengths of its operations.
Looking ahead, KeyBanc anticipates a positive trajectory for Diamondback Energy as it completes the acquisition of Endeavor Energy Resources, which is expected to further solidify its position among large-cap exploration and production companies like EOG Resources (NYSE:EOG) and ConocoPhillips (NYSE:COP). This move is seen as an advancement in Diamondback's strategic growth, reinforcing its status in the sector.
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