William Blair initiated coverage of Viper Energy (VNOM) with an Outperform rating. The firm notes Viper Energy is the largest public minerals company offering material long-term value. Its quality inventory operated by leading exploration and production companies, primarily parent company Diamondback Energy, delivers high per-share growth due to strong margins. The growth leads to sizable shareholder return given its industry-low base dividend breakeven and 75% minimum shareholder equity payout. In Blair’s view, Viper deserves a material premium versus other public minerals companies given its status as the leader in net acres and market cap, along with quality of operational partners. Further, shares could trade as high as a 7% yield, suggesting a fair value of $54 per share, or 46% upside, the firm adds.
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