Suvro Sarkar, an analyst from DBS, maintained the Hold rating on Diamondback (FANG – Research Report). The associated price target was lowered to $168.00.
Suvro Sarkar has given his Hold rating due to a combination of factors impacting Diamondback Energy’s stock. The company’s recent financial performance has been strong, with adjusted net income exceeding expectations due to increased production volumes. However, the anticipated moderation in commodity prices could limit further upside in earnings despite the robust growth outlook.
Moreover, while the merger with Endeavor Energy Resources is expected to drive significant growth and improve operational efficiencies, Diamondback’s relatively high gearing compared to its peers poses a challenge. The company’s commitment to using free cash flow to reduce debt and improve shareholder returns is a positive, but the potential risks from lower commodity prices and high interest rates remain concerns. These factors contribute to a cautious outlook, justifying the Hold rating with a target price of USD 192.