Susquehanna Maintains Positive on Diamondback Energy, Lowers Price Target to $190
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Jan 26 2024
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Should l Buy FANG?
Source: Benzinga
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Analyst Views on FANG
Wall Street analysts forecast FANG stock price to fall
19 Analyst Rating
18 Buy
1 Hold
0 Sell
Strong Buy
Current: 202.190
Low
158.00
Averages
180.94
High
218.00
Current: 202.190
Low
158.00
Averages
180.94
High
218.00
About FANG
Diamondback Energy, Inc. is an independent oil and natural gas company, focused on the acquisition, development, exploration and exploitation of unconventional, onshore oil and natural gas reserves primarily in the Permian Basin in West Texas. The Company's activities are primarily directed at the horizontal development of the Wolfcamp and Spraberry formations in the Midland Basin and the Wolfcamp and Bone Spring formations in the Delaware Basin within the Permian Basin. Its subsidiary, Viper Energy, Inc., is focused on owning and acquiring mineral interests and royalty interests in oil and natural gas properties primarily in the Permian Basin and derives royalty income and lease bonus income from such interests. The Company has approximately 859,203 net acres, which primarily consists of 742,522 net acres in the Midland Basin and 116,681 net acres in the Delaware Basin. Its subsidiaries include Diamondback E&P LLC, Rattler Midstream GP LLC, Rattler Midstream LP and QEP Resources, Inc.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
Surging Oil Prices Propel Energy Stocks Higher
- Impact of Rising Oil Prices: The ongoing war with Iran has caused Brent crude prices to surge from $60 to over $100, a more than 70% increase, directly impacting the oil market and suggesting that prices will continue to rise, benefiting all oil companies.
- ConocoPhillips Cash Flow Growth: ConocoPhillips expects to generate sufficient cash to fund its capital program at mid-$40 oil prices, having produced $7.3 billion in free cash flow last year, covering its $4 billion dividend, and anticipates an additional $1 billion in free cash flow this year due to reduced capital spending.
- EOG Resources Efficient Profitability: EOG Resources boasts an average after-tax return exceeding 100% at $55 oil, having reduced average well costs by 7% over the past year, and expects to generate $10 billion in cumulative free cash flow over the next three years at $55 oil, with higher prices further enhancing profitability.
- Diamondback Energy Robust Cash Flow: Diamondback Energy can maintain production at an average oil price of $30, projecting over $3.1 billion in free cash flow at $50 oil, with plans to return half of its free cash flow to shareholders, thereby strengthening its financial position.
See More
Surging Oil Prices Boost Energy Companies' Profits
- Capital Spending Plan: ConocoPhillips only requires oil prices in the mid-$40s to fund its capital spending plan, having generated $7.3 billion in free cash flow last year at mid-to-high $60 oil, which comfortably covered its $4 billion dividend payments, and it expects an additional $1 billion in free cash flow this year due to lower capital spending.
- High Return Rates: EOG Resources can achieve over 100% direct after-tax return on new wells drilled at $55 oil, having reduced average well costs by 7% over the past year, and it anticipates generating $10 billion in cumulative free cash flow over the next three years at $55 oil, potentially rising to $18 billion if crude averages $70.
- Low Breakeven Point: Diamondback Energy requires only $30 oil to maintain its current production rate, expecting to generate over $3.1 billion in free cash flow at $50 oil and more than $6.7 billion at $80 oil, with plans to return half of its free cash flow to shareholders.
- Shareholder Return Strategy: All three energy companies have built their operations on sub-$50 oil, and as crude prices soar into triple digits, they are likely to return this windfall to shareholders through increased dividends and share repurchases, enhancing shareholder value significantly.
See More
Wall Street's Top Dividend Stock Picks
- Diamondback Energy Performance: Diamondback Energy (FANG) recently paid a cash dividend of $1.05 per share, with a dividend yield of about 2%, and analysts expect an average total return of 22% from 2027 to 2030, indicating strong potential in a volatile commodity market.
- Crescent Energy Upgrade: Crescent Energy (CRGY) was upgraded to buy by JPMorgan with a price target of $19, offering a quarterly dividend of 12 cents per share and a yield of 3.5%. Analysts highlighted the company's strong value creation through the acquisition of Vital Energy, despite its high debt levels.
- Darden Restaurants Strong Earnings: Darden Restaurants (DRI) declared a quarterly dividend of $1.50 per share, with an annualized dividend of $6, yielding approximately 3.1%. Despite inflationary pressures, Darden achieved strong same-store sales growth in Q3, leading analysts to maintain an optimistic outlook on its profitability.
- Analyst Ratings Support: Top analysts' buy ratings for FANG, CRGY, and DRI are backed by in-depth macro and micro analyses, showcasing these stocks' attractiveness in the current market environment and helping investors seek stable investment opportunities amid uncertainty.
See More
Potential Impact of Oil Prices Soaring to $150
- Oil Price Surge Context: Oil prices have surged to around $100 per barrel due to the conflict in Iran and the closure of the Strait of Hormuz, with projections suggesting prices could exceed $150 if the situation persists, potentially straining the global economy.
- Opportunities for ConocoPhillips: As one of the largest upstream energy companies globally, ConocoPhillips generated over $16 billion in free cash flow in 2022, and if oil prices reach $150, free cash flow could exceed $20 billion, with management planning to return 45% of excess cash flow to shareholders by 2026.
- Growth Potential for Diamondback Energy: Focusing on the North American market, Diamondback Energy generated $5.5 billion in free cash flow last year, and oil prices hitting $150 could significantly boost its cash flow, with the company actively repurchasing shares to reward shareholders.
- Geopolitical Risks and Investment Strategy: The closure of the Strait of Hormuz adds uncertainty to the market, prompting investors to consider increasing their stakes in ConocoPhillips and Diamondback Energy as a hedge against potential supply shocks, ensuring profitability amid rising oil prices.
See More
Surging Oil Prices to Benefit Upstream Producers
- Oil Price Impact: If oil prices reach $150 per barrel, upstream producers like ConocoPhillips and Diamondback Energy are expected to benefit significantly, likely boosting their cash flows and shareholder returns.
- ConocoPhillips Cash Flow Outlook: The company generated 2.375 million barrels of oil last year, and if oil prices hit $150, free cash flow could exceed $20 billion, with management planning to return 45% of excess cash flow to shareholders by 2026.
- Diamondback Energy Market Performance: Focusing on North American oil, Diamondback Energy generated $5.5 billion in free cash flow last year, and with a market cap of $55 billion, it shows strong growth potential if oil prices rise.
- Geopolitical Risks: The closure of the Strait of Hormuz could lead to skyrocketing oil prices; although oil has never reached $150, historical data indicates that such volatility can have profound effects on the global economy, prompting investors to prepare for potential supply shocks.
See More
Major Stock Indexes Decline Amid Energy Supply Concerns
- Meta Oversold: Meta's relative strength index (RSI) dropped to 22.1 after losing two major court cases and shedding over 11% of its stock last week, indicating a pessimistic market sentiment that may prime it for a near-term rebound.
- Court Rulings Impact: A California jury ruled that Meta and YouTube were liable for harmful addictive features on their platforms affecting minors, with Meta ordered to pay $2.1 million in damages, intensifying investor concerns about its business model.
- Layoff Measures: Meta's layoffs across Facebook, global operations, recruiting, sales, and Reality Labs aim to alleviate investor anxieties over its frequent and costly corporate strategy shifts, potentially impacting its long-term growth prospects.
- Energy Stocks Overbought: Energy companies like APA, with an RSI of 87.8, saw stock prices jump nearly 14% last week due to supply chain disruptions from the Iran war, reflecting strong investor demand for energy stocks, which may face short-term pullback risks.
See More
Surging Oil Prices Propel Energy Stocks Higher
- Impact of Rising Oil Prices: The ongoing war with Iran has caused Brent crude prices to surge from $60 to over $100, a more than 70% increase, directly impacting the oil market and suggesting that prices will continue to rise, benefiting all oil companies.
- ConocoPhillips Cash Flow Growth: ConocoPhillips expects to generate sufficient cash to fund its capital program at mid-$40 oil prices, having produced $7.3 billion in free cash flow last year, covering its $4 billion dividend, and anticipates an additional $1 billion in free cash flow this year due to reduced capital spending.
- EOG Resources Efficient Profitability: EOG Resources boasts an average after-tax return exceeding 100% at $55 oil, having reduced average well costs by 7% over the past year, and expects to generate $10 billion in cumulative free cash flow over the next three years at $55 oil, with higher prices further enhancing profitability.
- Diamondback Energy Robust Cash Flow: Diamondback Energy can maintain production at an average oil price of $30, projecting over $3.1 billion in free cash flow at $50 oil, with plans to return half of its free cash flow to shareholders, thereby strengthening its financial position.
See More
Surging Oil Prices Boost Energy Companies' Profits
- Capital Spending Plan: ConocoPhillips only requires oil prices in the mid-$40s to fund its capital spending plan, having generated $7.3 billion in free cash flow last year at mid-to-high $60 oil, which comfortably covered its $4 billion dividend payments, and it expects an additional $1 billion in free cash flow this year due to lower capital spending.
- High Return Rates: EOG Resources can achieve over 100% direct after-tax return on new wells drilled at $55 oil, having reduced average well costs by 7% over the past year, and it anticipates generating $10 billion in cumulative free cash flow over the next three years at $55 oil, potentially rising to $18 billion if crude averages $70.
- Low Breakeven Point: Diamondback Energy requires only $30 oil to maintain its current production rate, expecting to generate over $3.1 billion in free cash flow at $50 oil and more than $6.7 billion at $80 oil, with plans to return half of its free cash flow to shareholders.
- Shareholder Return Strategy: All three energy companies have built their operations on sub-$50 oil, and as crude prices soar into triple digits, they are likely to return this windfall to shareholders through increased dividends and share repurchases, enhancing shareholder value significantly.
See More
Wall Street's Top Dividend Stock Picks
- Diamondback Energy Performance: Diamondback Energy (FANG) recently paid a cash dividend of $1.05 per share, with a dividend yield of about 2%, and analysts expect an average total return of 22% from 2027 to 2030, indicating strong potential in a volatile commodity market.
- Crescent Energy Upgrade: Crescent Energy (CRGY) was upgraded to buy by JPMorgan with a price target of $19, offering a quarterly dividend of 12 cents per share and a yield of 3.5%. Analysts highlighted the company's strong value creation through the acquisition of Vital Energy, despite its high debt levels.
- Darden Restaurants Strong Earnings: Darden Restaurants (DRI) declared a quarterly dividend of $1.50 per share, with an annualized dividend of $6, yielding approximately 3.1%. Despite inflationary pressures, Darden achieved strong same-store sales growth in Q3, leading analysts to maintain an optimistic outlook on its profitability.
- Analyst Ratings Support: Top analysts' buy ratings for FANG, CRGY, and DRI are backed by in-depth macro and micro analyses, showcasing these stocks' attractiveness in the current market environment and helping investors seek stable investment opportunities amid uncertainty.
See More
Potential Impact of Oil Prices Soaring to $150
- Oil Price Surge Context: Oil prices have surged to around $100 per barrel due to the conflict in Iran and the closure of the Strait of Hormuz, with projections suggesting prices could exceed $150 if the situation persists, potentially straining the global economy.
- Opportunities for ConocoPhillips: As one of the largest upstream energy companies globally, ConocoPhillips generated over $16 billion in free cash flow in 2022, and if oil prices reach $150, free cash flow could exceed $20 billion, with management planning to return 45% of excess cash flow to shareholders by 2026.
- Growth Potential for Diamondback Energy: Focusing on the North American market, Diamondback Energy generated $5.5 billion in free cash flow last year, and oil prices hitting $150 could significantly boost its cash flow, with the company actively repurchasing shares to reward shareholders.
- Geopolitical Risks and Investment Strategy: The closure of the Strait of Hormuz adds uncertainty to the market, prompting investors to consider increasing their stakes in ConocoPhillips and Diamondback Energy as a hedge against potential supply shocks, ensuring profitability amid rising oil prices.
See More
Surging Oil Prices to Benefit Upstream Producers
- Oil Price Impact: If oil prices reach $150 per barrel, upstream producers like ConocoPhillips and Diamondback Energy are expected to benefit significantly, likely boosting their cash flows and shareholder returns.
- ConocoPhillips Cash Flow Outlook: The company generated 2.375 million barrels of oil last year, and if oil prices hit $150, free cash flow could exceed $20 billion, with management planning to return 45% of excess cash flow to shareholders by 2026.
- Diamondback Energy Market Performance: Focusing on North American oil, Diamondback Energy generated $5.5 billion in free cash flow last year, and with a market cap of $55 billion, it shows strong growth potential if oil prices rise.
- Geopolitical Risks: The closure of the Strait of Hormuz could lead to skyrocketing oil prices; although oil has never reached $150, historical data indicates that such volatility can have profound effects on the global economy, prompting investors to prepare for potential supply shocks.
See More
Major Stock Indexes Decline Amid Energy Supply Concerns
- Meta Oversold: Meta's relative strength index (RSI) dropped to 22.1 after losing two major court cases and shedding over 11% of its stock last week, indicating a pessimistic market sentiment that may prime it for a near-term rebound.
- Court Rulings Impact: A California jury ruled that Meta and YouTube were liable for harmful addictive features on their platforms affecting minors, with Meta ordered to pay $2.1 million in damages, intensifying investor concerns about its business model.
- Layoff Measures: Meta's layoffs across Facebook, global operations, recruiting, sales, and Reality Labs aim to alleviate investor anxieties over its frequent and costly corporate strategy shifts, potentially impacting its long-term growth prospects.
- Energy Stocks Overbought: Energy companies like APA, with an RSI of 87.8, saw stock prices jump nearly 14% last week due to supply chain disruptions from the Iran war, reflecting strong investor demand for energy stocks, which may face short-term pullback risks.
See More
