William Blair analyst Neal Dingmann has maintained their bullish stance on FANG stock, giving a Buy rating today.
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Neal Dingmann has given his Buy rating due to a combination of factors, including Diamondback Energy’s strategic divestitures that effectively address any debt concerns without impacting free cash flow (FCF). The company has announced significant asset sales, including a 27.5% equity interest in EPIC Crude Holdings and various water handling assets, which collectively bring in substantial cash and allow Diamondback to achieve its debt reduction target ahead of schedule. This financial maneuvering positions the company to potentially increase stock buybacks, enhancing shareholder value.
Furthermore, Dingmann notes that Diamondback’s shares are trading at attractive valuation multiples compared to industry averages, with a 5.1x EV/EBITDAX multiple and an 11% FCF yield. Given the company’s low costs, high margins, and operational efficiencies, Dingmann believes that Diamondback deserves a premium valuation similar to major industry players. He projects a fair value of $212 per share, suggesting a significant upside potential of 43%, making the stock an appealing investment opportunity.
In another report released today, Roth MKM also maintained a Buy rating on the stock with a $160.00 price target.